As any experienced international trade professional can tell you, doing business in global markets isn’t without its trade finance challenges.

Breaking into a new market often involves a significant investment upfront, and keeping track of currency fluctuations can be an ongoing concern once you do. On top of that, it’s not always easy to secure payment, and chasing down money owed to you or your business can be a real hassle.

With these trade finance challenges in mind, here’s some advice from case studies from the FITTskills International Trade Finance course that will help smooth the path towards success.

1. How do I choose the right bank or financial institution to help finance my international business?

The thought of taking out a sizable loan or financing plan can cause trepidation. Fortunately, taking the right steps before money ever changes hands to select a financial partner you trust and will offer you what you need should alleviate many of your concerns.

Like many aspects of exporting and importing, thorough research of several options is necessary. It’s OK to have a preferred option in mind, but make sure you’re not missing opportunities elsewhere that could benefit your business in the long run. Thoroughly investigate and compare each option before you even make an initial appointment, and understand the costs, benefits, and disadvantages of each option.

Having trouble deciding which options to focus on? Referrals are one excellent option.

If a bank or financial institution has worked well for similar companies you know, it could be a strong option to start your search.

Government-supported options are also excellent places to look for financing. In Canada, organizations such as Export Development Canada (EDC) and the Business Development Bank of Canada (BDC) are well equipped to help you with trade finance challenges, while American companies can look at the U.S. Export-Import Bank and the U.S. Small Business Administration.

2. How can I minimize risk related to fluctuations in foreign currency?

While a change in the exchange rate could potentially reduce costs, it’s the opposite situation where a change increases costs that can keep finance professionals up at night.

One solution could be to write a fixed rate of exchange directly into a contract, along with the price, date and quantity of an order. This type of contract is known as a forward foreign exchange contract. While this forces you to forego any potential benefits of a changing exchange rate, the stability reduces risk and makes it easier to budget within a larger financial plan.

Another option is to negotiate to have the prices set in your domestic currency, meaning any risk then falls on your buyer or supplier who uses a different currency, rather than your business. Different businesses may value using their own currency, so make sure you know how much such a concession would be worth to your business, and what you may be willing to give in order to assure your needs are met in your contract.

Potential exchange rate fluctuations could also be used as a factor when negotiating the overall price. A buyer may be able to use intense fluctuations as part of a strategy to negotiate a lower price, while a seller may use a stable rate to negotiate a higher price.

In some situations, a company may want to purchase an option from a bank or other financial institution, a specific agreement to allow you or your company buy or sell a certain currency at a fixed exchange rate by a specific date. Another similar option would be to sign a futures contract, fixing a rate to exchange one currency for another with a specific bank or institution for a certain date.

3. How can I make sure I receive payments, and don’t have to chase debtors around the world?

It’s bad enough trying to chase someone down who owes you something back in an everyday context, like books they borrowed or their share of a restaurant tab.

Just think of how those issues would become exponentially more complicated when you’re chasing down another person or business in another country, who owes significantly more money.

A debt collection agency can be used if needed, but results cannot be guaranteed and a portion of the reclaimed amount will then be owed to the agency, reducing the amount your business will receive in total.

Receiving some of the money owed to you is certainly better than none, but whenever possible take steps up front to ensure full payment will be made.

While not always an option, the most fail-proof way to ensure you get paid is to guarantee payment from a third party through a confirmed letter of credit or export credit insurance. This way, payment is guaranteed to the seller, even if the buyer is unable to make the full payment, as is the funds will be backed by the bank or agency.

A company can also request full prepayment before delivery when there is a perceived risk of non-payment. It is also possible to negotiate to receive money in installments based on specific actions if concerns about the buyer’s immediate cash flow are part of the discussion.

The post Overcome 3 of the biggest trade finance challenges with these tips appeared first on Trade Ready.

Today, Carl Gravel is an experienced executive helping small businesses across Canada as a director at the Business Development Bank of Canada (BDC). Though he is now an integral member of one of Canada’s largest corporations, Carl has spent many years working hard to get to where he is today.

After earning his degree in finance and commerce, Carl’s career began in the finance industry.  By 2000, after spending several years of dedication, he earned the position of Structured Finance Manager with the National Bank of Canada where he began working with international clients for the first time. Doing so sparked a passion for international business which has guided his career path ever since.

“I started my international career when I was working on a special project many years ago. The project objective at the time was to support the Bank’s client in its work with China, and I fell in love with international business while working on it.”

“My first experiences going with clients to China in the early 2000’s certainly represent vibrant memories. Helping to negotiate deals between Canadian and Chinese entrepreneurs was very exciting.”

Since then, I’ve always enjoyed working with entrepreneurs and supporting them with their ambitions to become small multinationals!

In 2005, Carl’s passion led him to start his own private consulting company, PFL International. With a focus on helping Canadian SMEs enter or expand their businesses in Asian and European markets, he was able to build upon his experience and help many companies. He was also able to improve his global business skills, particularly those regarding intercultural communication and negotiation.

“If I could go back and give myself advice at the beginning of my career, I’d want to teach my younger self about the importance of dealing with different cultures and languages, as well as the time required to build trust.”

The excitement of supporting Canadian SMEs around the world

In 2007, Carl was offered a prestigious role with BDC as their National Director, Manufacturing, and has since continued to grow within the organization.

The organization’s main focus is to offer financing, capital and advisor services to Canadian SMEs, the perfect marriage of Carl’s financial background and passion for helping SMEs in global markets. After ten years there, he remains a firm advocate of their mission and enjoys every opportunity to help Canada’s business talent shine worldwide.

“Every time I work with an SME looking at expanding into international markets, it is exciting and interesting.”

We have so many good companies in Canada offering a lot of value. We need to better showcase them to the world!

In his initial role at BDC, he was responsible for developing the organization’s strategy to support manufacturers, including developing finance solutions to help them do more business in international markets.

In 2010 he was named National Director, Global Expansion (Financing and Consulting), and was put in charge of BDC’s Ontario and Quebec sales teams for their finance and consulting services.

He achieved his current position of Director of International Expansion in 2013. His focus is now on the consulting side of BDC leading their national team as they look to support increasing numbers of Canadian SMEs doing business globally.

Becoming part of a growing international business community

That same year, Carl also started taking FITTskills online courses, completing the entire program by 2016. He found taking the courses beneficial to his overall understanding of international trade, and is eager to recommend the courses to international business professionals.

I found the FITTskills courses to be comprehensive and very practical, especially for smaller businesses. It really gave me a structured thinking around the important aspects of international trade. I think anybody that is involved in international trade should follow the program.

Upon completing the courses and earning his FITT Diploma in International Trade, he applied for the elite Certified International Trade Professional (CITP®|FIBP®) designation and was proud to add it to his list of career accomplishments.

“I was looking for something practical, and it was a widely recognized certification across Canada. I felt very satisfied when I received it. I felt I became part of a solid international community.”

As he continues to help SMEs across Canada reach new heights in global markets, he says that what he’s gained from the FITTskills program and earning his designation will be an important part of meeting his goals.

“My role is to develop international solutions for SMEs and help them to understand the opportunities and challenges of international business, and I am sure all my gained global trade knowledge will be helpful in doing so.”

With Carl carrying on this important work, Canadian SMEs looking for help are in safe and capable hands and we’re looking forward to seeing him empower more businesses excel in global markets.

The post Carl Gravel, CITP|FIBP – Director of International Expansion appeared first on Trade Ready.

A newspaper article reporting on a recent BDC study about the benefits of Advisory Boards for entrepreneurs made me think of a Certified International Trade Professional (CITP) colleague who teaches FITT courses. Over time he has become an informal advisor to some of his students who are planning to get started in the international field. Both he and I receive a couple of requests every month from current and former students who seek advice on starting a business.

Too busy to ask for help?

According to the BDC study (which surveyed more than 1,000 Canadian businesses), most entrepreneurs think it takes too much effort to set up an advisory board.

They work so hard to make their business succeed that they don’t want to take the time to stand back and think about its future, or the value of having people help them to do so.

The survey—which is the first of its kind qualifying and quantifying the use of advisory boards—reports that only 6 percent of Canadian small and medium-sized businesses (SMEs) use an advisory board – and yet the study showed that SMEs who created one grew by 67 percent.

Being a new entrepreneur has its challenges

Like me, my teaching colleague is a former businessman who finds that many of his students are often budding entrepreneurs. They may be newcomers to Canada dreaming of starting their own business, or may simply be attracted to the idea because of an interest in foreign countries…. but the concept of running one’s own business has immense universal appeal.

Unfortunately, most start-ups struggle with the usual challenges – insufficient planning, lack of financing, no marketing or sales expertise, difficulty in finding suitable partners, the never-ending search for new clients, managing the stress of family commitments while simultaneously running a new business and, most importantly, not having an experienced mentor to call for advice.

Entrepreneurs will always be entrepreneurial, and they are generally adventurous, idealistic, single-minded, stubborn, goal-oriented, hard-working and often impetuous.

If and when they finally relent and decide to seek advice, many often turn to people who are not necessarily neutral or experienced enough to act in their best interests. Not having a professional to call on for arms-length, practical and hard-nosed opinions at those times can be devastating to a SME, particularly in the early days when the pressure is high.

Benefit from an experienced opinion!

These are the times when CITPs can offer useful opinions and advice based on personal experience.

FITT has CITPs who are experts in virtually every facet of international trade, and many have also started their own companies. This very background originally qualified them to become CITPs, and the ability for an entrepreneur to be able to contact them and ask for an independent opinion is priceless.

While neither my friend nor I can replace an advisory board, we know that we have helped a number of start-up entrepreneurs succeed. The opportunity to “pay forward” one’s experience is very satisfying, particularly when former students call to describe their eventual successes, due in part to a conversation they may have had with a CITP.

Mentoring a would-be entrepreneur is yet another privilege of being a CITP.

Have you ever advised a start-up, or been advised yourself by more experienced international business professionals? Share your own story below.

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