Cross Border Trade

Cross Border Trade: Ensuring the uninterrupted flow of business across borders

According to a new study from the UK’s Association of Chartered Certified Accountants (ACCA), alternative financing tools could potentially provide between US$255 billion to US$280 billion of cross-border trade financing, or 20 to 25 percent of an industry’s accounts payable.

Cross Border Trade (or CBT), which has been around way before the days of Marco Polo, is a strategic way to expand your customer base and increase profits. With access to the Internet, we are provided with a “borderless” environment that makes it easier to find leads and market your business around the globe. However, if you are venturing into the CBT arena for the first time, the complexities of doing business with other countries can seem daunting.

There are many helpful resources available to get you on a solid path to CBT, including your local World Trade Center and U.S. Government publications and websites. The U.S. Department of Commerce Commercial Service Export Decision Tree is a good place to start; it provides a list of resources and trade representatives. The World Bank offers a 333-page downloadable guide, Doing Business Abroad, with easy to access data on 189 economies around the globe. This guide lets you review “at a glance” and compare documentation requirements, average shipping costs and other components of CBT in order to determine the viability and profit opportunities for the regions you might be considering as trading partners. The World Bank, Trading Across Borders is another information-packed resource that can open doors for your business.

No matter where you plan to launch your CBT effort, your success will depend on your access to working capital. It is estimated that trade finance supports about one-third of all global trade[1]. Until recently, commercial banks provided working capital through trade finance vehicles; however, a new global bank regulatory standard, Basel III, is changing that. The new regulations, intended to make banks more resilient, have many in the financial services industry concerned that Basel III’s requirements will stifle the banking industry’s willingness to continue investing in trade.

Global Trade Finance volumes valued at US$124 billion in 2013[2] were down from US$184.5 billion in 2012, due in part to the lingering impact of the 2008 economic crisis. With global merchandise trade on the rise again[3], even a small pull back on trade funding, a core component of the economic recovery, could damage businesses within the import/export sector. Basel III fears have the potential to prevent banks from funding trade, significantly impeding the flow of goods and services across borders.

Alternative finance firms, such as ExpoCredit Financial Group are positioned to fill the trade funding gap to keep the wheels of international commerce in motion. Alternative funding, led by ExpoCredit, is fast becoming the resource of choice for the global supply chain. ExpoCredit’s broad portfolio of financial services includes a unique financial offering specifically structured to enhance procurement cycles through direct payment to suppliers.

ExpoCredit’s unsecured supply chain financing solution ensures the uninterrupted flow of your business across borders. When favorable credit terms are not available from vendors, ExpoCredit steps in to facilitate the transaction by purchasing the product directly from the supplier. Leveraging ExpoCredit’s supply chain financing, you can enhance your relationships with your suppliers by paying down orders upfront, and qualifying for fast-pay discounts.

Despite the outcome of Basel III or other new banking accords, ExpoCredit offers substantial advantages over conventional supply chain finance by providing a faster process, free of covenant, asset appraisals and other heavy documentation.

According to a new study from the UK’s Association of Chartered Certified Accountants (ACCA), alternative financing tools, such as ExpoCredit’s could potentially provide between US$255 billion to US$280 billion of cross-border trade financing, or 20 to 25 percent of an industry’s accounts payable.

If your company is ready to expand your business across international borders, contact ExpoCredit for your working capital needs at info@www.expocredit.com, or visit www.expocredit.com

[1] https://www.bis.org/publ/cgfs50.pdf
[2] https://www.tradefinancemagazine.com/Article/3294639/Dealogic-Trade-finance-volumes-fell-again-in-2013.html
[3] https://unctad.org/en/pages/Statistics.aspx

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