While every business is unique, taking inventory of what worked for other successful enterprises, and what didn’t, can help you keep your business on the right track and even boost it to the next level of profitability, growth, and customer approval ratings.

Keep in mind: learning from mistakes doesn’t just apply to our personal lives.

Let’s take a look at common mistakes international businesses make, and how trade finance can relieve some of the financial stresses that come with the territory of being an entrepreneur:

1. Poor cash flow management, the #1 reason small businesses fail

So many parts of running a business rely on a healthy cash flow. Working capital is not only used to cover everyday expenses like payroll and electricity, but it is also needed to pursue bigger plans like growth and expansion into new markets.

There are a couple of factors that can impair cash flow, however, leaving a company with a lower reserve of liquidity than it would like.

In fact, according to a report from Jessie Hagen, previously of US bank, 82% of failed small and medium-sized businesses went under due to poor cash flow management.

Too much growth, too little capital

Growing too much, too quickly, in some cases, can actually be detrimental for a business. Rapid growth may have the adverse effect of drying up cash and might ultimately send a business hurling towards bankruptcy.

This, in fact, happened to the ice cream brand Ample Hills, based in Brooklyn, New York. The company grew from a single local scoop shop to having a footprint of 17 stores nationwide, links with Disney, a presence in grocery retail outlets, and a stamp of approval from Oprah Winfrey, according to the New York Times. Though this brand never ended up expanding overseas, rapid growth without the right support can hurt businesses trading internationally just the same.

Brian Smith, Ample’s co-founder, revealed to the Times, “We made every mistake it is possible to make.”

This included an ill-placed location in Los Angeles and switching up packaging from a traditional round container to a square one. Even with the Ample Hills brand skyrocketing to success, decisions like these ultimately sapped the company’s cash.

Trading with long payment terms in place without the right oversight and support

While the demands of rapid growth may be one culprit for leaving a company cash-strapped, long payment terms with buyers can also drain a company’s liquidity if not managed correctly.

Today, many commercial transactions occur on open account terms, which means buyers are allowed to pay their bills months after an invoice is generated.

Recent data shows that large U.S. buyers take an average of 54.7 days to pay their invoices.

While giving customers the freedom to pay later can help a business win and retain orders, a company must be vigilant of the cash gap that can occur with such terms in place. Many businesses may find themselves needing to pay their vendors upfront, while still waiting on payment for their sales.

Without a keen awareness of the overlap in outgoing and incoming payments, cash flow might be jeopardized.

2. Selling domestically or internationally without having the demand needed to succeed

It can be the aspiration of many growing companies to expand domestically, or even enter new markets abroad. But without the demand overseas or at home, your product may turn out to be a flop.

According to a recent Forbes article titled “Small Business Statistics of 2024”, inadequate market demand is the second most common culprit for business failure.

Inadequate market demand is the second most common culprit for business failure.

“For a small business to be successful, it’s imperative not only to have adequate capital to sustain operations in the early stages but also to ensure there is a consistent and growing demand for its products or services,” the article states.

Given this common mistake, it’s imperative to conduct sufficient due diligence before launching a new product or service. A business must take the necessary steps, like conducting a market gap analysis and gaining a full grasp of the demographics they’re trying to reach, in order to set itself up for success.

3. Skipping credit protection

As we’ve seen in the past couple of years, several big-box retailers have gone out of business. These famously include Bed Bath & Beyond, Christmas Tree Shop, and Lord & Taylor.

When doing business with these large buyers, credit protection can come in handy if bankruptcy is looming for the retailer.

It’s not always easy to predict if a retailer will shutter, but the pandemic taught us that large brands can go bankrupt, and if they don’t fully collapse, then they can still be tardy on their payments to suppliers or skip paying them completely.

How trade finance can help businesses stay the course

Trade finance is a tool that can help businesses better manage their cash flow, reduce trade risk, and accelerate their growth, among other things. Companies of all sizes can take advantage of this financial resource, but small and medium-sized enterprises are especially known to benefit, since traditional banks may require them to meet stricter borrowing criteria.

If a business opts to use trade finance services, here’s how it works:

A financial intermediary will purchase their unpaid invoices and will provide them cash upfront in exchange. This sum of cash will equal up to 95% of the invoice amount.

By receiving this cash advance on the payment they are owed, a business can pay their own supplier on time, or on an earlier schedule. Retailers and other buyers can still enjoy longer windows to pay their invoices since the financial intermediary is able to close the payment gap.

What’s more, trade finance also includes credit protection and collections services.

This means that a business is guaranteed to get paid even in the case of buyer insolvency, as the financial intermediary absorbs the risk in this case and will ensure the business gets paid.

Since running a business requires a lot of focus on marketing, R&D, and customer service, accounts receivable management that comes as part of trade finance packages can take the burden of collecting payment from customers off the business.

The Upshot

Operating a business has its challenges, but it also comes with many rewards. Paying attention to the mistakes that other businesses have made can certainly protect a company from falling into the same pattern.

To get a better handle on cash flow, secure an extra layer of security, and get more freedom to focus on running core business activities, a company can consider trade finance as a solution that can clear hurdles and pave the way for success.

The post 3 common mistakes that cause international businesses to fail – and how to avoid them appeared first on Trade Ready.

Looking for ways to survive, recover any thrive again, businesses are doing everything they can to increase cashflow and efficiencies. But a recent U.S. Bank study by found 82% of businesses fail due to cash flow mismanagement.

When it comes to international businesses there is an increased layer of complexity and expenses to consider. To find out the most impactful ways businesses can reduce costs and keep cash flowing, FITT brought together experts in customs, shipping, international business strategy and import/export finance.

We explored partnerships, product adaptation, customs issues and preventative measures, shipping methods pros and cons as well as funding options and other cost cutting strategies relevant to international businesses of all sizes.

Watch the full webinar including a LIVE Q&A with the panel

Small business strategies to cut costs without damaging your business

Bernadette Fernandes – Founder & CEO, The Varanda Network

Bernadette’s global business career began in 1986 and has spanned several sectors. She has spent the last 10 years consulting her Varanda Network clients all over the world. She is passionate about helping SMEs develop their export readiness and connect them to business opportunities in markets worldwide.

What are some costs that businesses can cut from their budgets without damaging their businesses?

Bernadette:
Well, in an ironic way, COVID has cut a lot of those costs for us, such as travel. I can’t say that it was without damaging our businesses, as revenues are almost always negatively impacted when big opportunities are cut such as traveling to meet a buyer or to cast our nets wide at a trade show or networking event. But certainly cutting what I call “non-essentials” early on and focusing on profitability will lessen that impact. Costs could be cut would be things like office space. If you’re leasing for example, you could negotiate a new lease agreement given the remote working that’s happening due to COVID. Office supplies, such as printing, coffee, post, especially if you have less people coming into your office space are an easy cost to get rid of.

Technology is a tough one because I don’t normally advocate cutting technology, especially the technology that allows you to automate and streamline. But now’s not the time to invest. So if you’re looking at an inventory management system, for example, you may want to defer that decision and make do with spreadsheets and data entry. Corporate training is another one. Training and education is so important, but this is an area where you can instead focus on the best practices training that exists within your own organization. And then as much as I hate saying this, consulting services like mine would be a place to cut and focus on your more essential services.

Could you expand a bit more on what businesses should definitely not economize on right now?

Bernadette:
The top thing that I don’t think anyone should ever economize on is people. I don’t think that businesses should start looking at saving on their talent. The cost of getting them back tends to be far greater than retaining them. But if HR is your biggest cost, the one thing you can do is to shift the responsibilities to more revenue generating activities, streamlining processes to become more efficient and productive and things like updating your website and collateral.

By the same token, it is tempting to reduce wages or to lay off as a quick fix in times of crisis. But I find it’s always better if your people costs are so high that you have to do that, to reduce hours than to potentially use your top talent.

Marketing is typically among the first costs that people get rid of. But marketing is so essential because you’ll probably be looking to identify new target markets and develop new outreach strategies. So if you cut marketing, you will definitely damage your growth potential.

And lastly, I would say insurance. A pandemic is bad enough let alone a disaster accident in your operational facilities, but also insurance to cover product delivery and customer payments.

Could you tell us about some strategies that businesses are using to adapt and pivot while also keeping those costs down during a crunch time?

Bernadette:
Well, I see businesses showing their resilience all over the place, and in adapting to things that are beyond their control, like attending Zoom meetings instead of travel. In my line of business, I’m seeing a lot of virtual trade missions and site visits that we weren’t seeing before. And in some cases, when physical site visits are absolutely necessary to visit a supplier or a buyer, I’m seeing a lot of temporary outsourcing. An example of temporary outsourcing as I call it, would be contracting local boots on the ground to visit and gather the decision-making criteria that you need.

In terms of pivoting, the strategy I’m most seeing is a transformational strategy, mostly to digital and virtual business models, leveraging and maximizing on things like social media and advertising on Facebook for example, where it’s so inexpensive and effective for target marketing. Some businesses that have never leveraged government programs or funding, have found it useful to start leveraging some of those reimbursement programs or incentive programs to generate additional revenues.

And what I personally recommend is to focus on what you do well and cost-effectively, but expand your footprint. So you don’t have to reinvent or rethink, just go deeper into the market. But what businesses are doing most isn’t really a strategy at all but it’s just being ready to think and act fast.

Innovation and time to market are both critical during times like these. At the onset of COVID, many companies were able to pivot almost overnight to provide critical equipment and supplies, the respirators, the ventilators, PPE like face shields and gowns and rapid testing and disinfecting autonomous robots.

Finding, improving and optimizing partnerships to do more with less

Sonia Galat – Founder & Managing Director, Africa Business Venture

Sonia is the director of Africa Business Venture, an online platform providing advice and solutions for companies that are looking to do business in Africa or expand within the African markets. She is also the director of the Chamber of Commerce of the Ivory Coast. Coming originally from a legal background, Sonia has extensive experience working with international companies in the energy sector, helping them to outsource their supply chains and implementing global partnerships.

Sonia, what are some ways that businesses of all sizes are using partnerships to improve their business offerings, and efficiency?

Sonia:
Depending on what businesses want to achieve, they can use partners to enter new markets and develop some new channels. They might want to create new intellectual property or put their resources together to develop some new infrastructure or simply to reduce risk. I’m specialized in Africa and gaining access to new markets there. Having a local partner that already has a customer base and a niche is something that can really be helpful for companies. Especially now, this is the period where everybody’s at home, everybody’s more open to discussion, so this is a very good time for SMEs to position themselves in a market they may have never have previously considered.

The other elements that where you can use partners to reduce on costs could be sharing a piece of technology. See which elements of your company could be used by another company and create a whole new service, and test multiple things with different partners and see where it will lead. Another way to reduce inefficiencies and cut costs is to look into outsourcing the administrative tasks or low-level tasks that take a lot of energy and resources to countries such as Mexico or South Africa or any other countries where those low level tasks could be accomplished at a lower cost. That will free you up to put your resources and energy into developing new products that will help you get back to growth.

Can you tell us more about how businesses are finding these types of partnerships and ensuring that they’re a good fit for their business plans?

Sonia:
The first thing businesses should do is look at their existing partners. Is there any room for improvement? I often see businesses sign a partnership but then never put the marketing resources behind it to really develop the partnership. Is your partner trying to compare new markets? How can you support your partner? Once you’ve done this exercise, if you’re looking for new business partnerships because maybe you want to go into new territories, you will a lot of resources and databases available to help find potential partners.

I also recommend looking into joining a local Chamber of Commerce. They are great places to meet potential business partners. Trade organizations and associations are also really good places to find business partners that are pre-vetted so you know that they have the same vision in terms of what they want to achieve. And look at the virtual events that are happening at the moment. For a lot of SMEs, the cost of trade exhibitions is very high so they can usually do only one or two trade exhibition trade exhibitions per year. But right now the virtual trade exhibitions are almost all completely free, perfect for SMEs.

If there’s an opportunity to speak at a virtual event, that can be great visibility, or you can network online with other attendees. And one other place where I found some of my best contacts is through LinkedIn. You can use the LinkedIn sales navigator, but ensure you have a real strategy in terms of sourcing your contacts.

What are some of the ways that you’re seeing companies use technology to improve efficiency?

Sonia:
At Africa Business Venture this year we really dug into online marketing tools to automate how we reach out to customers and generate leads. I had no idea how many tools were out there, but they all offer free services. To take advantage of them you should develop a commercial strategy to reach new business opportunities by implementing those tools. We talked about attending virtual trade shows, but you could also create your own event with a focus on your own business and what your business can bring. Using platforms like Zoom, any business can create a whole curated event centered around their expertise and these events can be a perfect way to showcase their products.

Then when it comes to team development, you have also all of the online training that is available. There is so much content out there at the moment that this is a great time to dig into some online training for your staff to prepare for the next phase of your business.

Reducing customs and shipping costs is about more than just shopping around for the best prices

Rahim Mohtaram – Global Supply Chain and Purchasing Consultant, Smartech Investment Corp.

Rahim has been working in global supply chains for 15 years and has negotiated and executed more than 155 international contracts in sales, purchasing, agencies and distributors in 25 countries. He is also a CIFFA certified instructor and provides consultation on cost reduction strategies.

Where are importers, exporters losing money in international shipping right now?

Rahim:
Let’s look at our attitude about costs and price. I’ve seen many companies who are trying to decrease their costs by just decreasing the fees of customs brokers or transportation companies. A very important point which I always advise my customers to have in mind is that you have to think about the total landed cost, not just about the price that you are paying for services. In some situations, decreasing certain costs requires increasing some other costs in other fields. For example, if you pay a bit more to a professional transportation company for their freight, you may avoid many hidden costs.

Businesses are often surprised with hidden costs over the course of their supply chain. I expect my transportation company to clearly explain me what types of costs are included in their fees and what types of costs are not included. So we have to define the exclusions and inclusions. For example, sometimes I might give incorrect information to the transportation company about the weight and that might cause a very high fine such as, VGM, Verified Gross Mass. You should do the work to have a clear and comprehensive agreement with the transportation company and customs brokerage companies you work with.

I have a tip for small businesses: pay attention to abbreviations! When you see in your contract or in your quotation, the abbreviation, for example my price is $1,000 FIOST. FIOST means Free In Out Stowed and Trimmed. This has a technical meaning. And if you do not understand the meaning of this, it means that you will be surprised when you will receive your invoice. So, whenever you see something that you do not understand, ask for a clear definition.

Are there any other cost-saving logistics strategies that you’re seeing businesses employing right now during a time of disruption?

Rahim:
I think when we talk about costs, it’s not good to just talk about financial costs. We have to pay attention to some costs which are related to time and to headaches. Instead of just decreasing the financial costs, I suggest companies keep more inventory, because your credibility is more important than $1,000 or $2,000. Try to have some alternatives from local suppliers instead of buying 100% of your products from overseas.

Also ensure the optimum usage of weight and volume in air transport and road transport. We have to make the best of the space that we have. Along with that, ensure you are using the most suitable packaging for your product and your mode of transport. One of the best ways to do this is to have close relationship with your partners and suppliers and always look at ways of decreasing the costs together. Because we are a part of the same competition unit. Nowadays experts say that companies do not compete with each other, supply chains are competing with each other. So we have to find solutions along with our suppliers and with customers, and we have to work together to find the best solutions. Engage with customs brokers as early as you can because the rules are changing fast and you need the updated information.

Increasing your cash flow through financing may be more accessible than you think

Amesika Baeta, CITP – Senior Account Manager, Export Development Canada (EDC)

As a senior account manager at Export Development Canada, Amesika works with companies of all sizes, of all industries, helping them take their business abroad providing them with trade finance, knowledge and risk mitigation strategies. She has worked in international trade for over 10 years.

For businesses who are looking to increase their cash flow during a tough time, what are some of the available finance options?

Amesika Baeta:
This is probably the number one question that I receive, companies asking how do I access the necessary cash flow or working capital to grow my business? And what I tend to see is a company’s first step is always to run to their bank to ask for money. However, I feel strongly that running to your bank without being prepared can actually force you to lose out on opportunities to improve your position. This question come down to three important key items:

The first being self-evaluation in terms of the cost cutting experience. Does your company have a business plan? Have you adjusted your business plan to reflect the current pandemic? And by doing so, you are evaluating your business processes, the priorities for your company at this time, and really determining where that cashflow or that working capital is needed in your business at this time. Part of that strategy is also evaluating your expenses and reviewing what expenses can be cut. So for example, I’ve had some clients who’ve cut their executive pay, they’ve maybe reduced bonus payouts, sometimes reduced their workforce or they’ve found better efficiencies within their operations where they could quickly pivot to sell online as well.

Secondly, working with your current clients can also be a strategy, such as asking your clients for larger deposits or installment payments to get cash in the door much quicker. In this time, companies are very aware of the difficult position that various companies are in, especially when you’re a small business. We have to remember that conventional business practices are changing and you have to find the best practice that will suit your business. If your company has traditionally given longer payment terms such as net 60 or net 90 day terms, maybe this is a time where you should be re-evaluating that and cutting that back. Maybe you should only be extending 10 days or 15 days or maybe 30 at most in order to get that cash in as quickly as possible.

I also recommend, depending on the type of industry that you’re in, whether you provide a service or a product that you should be working with your clients to figure out whether there’s another type of product or service that they need at this time, and this can be another source of additional revenue for you. Right now, companies do not want to be going to multiple vendors or suppliers to provide them with the resources that they need. So if you can find a way to fulfill that need for them, it will not only bring more revenue into your business, but it will also further cement your relationship with that client because you’re serving their needs. So do not hesitate to speak to your clients, ask them what they need at this time and see how you as a business can support those needs.

And lastly, let’s talk about working capital. I know as a small business owner, it can be really scary to go to your bank, but I’ll tell you, the banks do have appetite right now. This is a social crisis with economic impacts, meaning we’re not yet in a recession so the banks do have a lot of money. Speak to them to see what they can do for you at this time, whether that means bumping up your operating line or establishing a new operating line.

It’s also important that businesses look at the different government programs that are available right now. EDC in partnership with the banks right now have a BCAP guarantee program, which is the Business Credit Accessibility Program, which helps get working capital to companies who are having specific cashflow challenges as a result of the pandemic. You do not have to be an exporter to apply for it and EDC is providing the 80% guarantee which will enable the bank to have more appetite to lend you the working capital that you need.

EDC itself is another great resource to go to for working capital right now. They are the small business bank and provide a variety of types of financing options for clients. Factoring is another way to get that cash flow that you need to complete a contract – you sell your purchase order to a factoring company and they will give you money up front so that you can use those proceeds to complete the contract. So these are some of the great measures that I think companies can think about and implement to improve their cashflow during this time.

Learn everything an importer or exporter needs to know about payment, risk mitigation, financing, and the flow of goods and services

How does insurance play into cost savings and what is your advice about how businesses can approach that right now, especially the ones who might be struggling?

Amesika:
We know that risk is inevitable as a business owner, especially when you’re doing business abroad. The real key is to evaluate where your risks are and have a plan to mitigate them. By having a plan and being prepared for whichever scenarios may arise will save you money down the road. You won’t be blindsided for any foreseen costs or charges that you didn’t know were coming. Credit insurance or what’s often referred to as “accounts receivable insurance” is a cost of doing business. It helps mitigate your risk of not getting paid. That saves you a lot of money because the amount of effort and time that go into replacing that revenue is a lot more detrimental and a lot more expensive than it is to pay for insurance in this time.

The post Save Money & Recover Faster – How international businesses can reduce costs through smarter shipping, partnerships & financing appeared first on Trade Ready.

ECAs are acknowledged to be important contributors, often highly expert, to the enabling of international trade. ECAs are a key resource to gather information on countries, industries, markets of opportunities as well as challenges around the world.

The role of ECAs, and the respective services offered, help companies grow their sales volume on the international market while making sure to manage the risks it takes when entering the international market. Furthermore, ECAs provide opportunities to collaborate with market players and to facilitate growth in exports.

How export credit agencies have evolved

Since their origins in post-war Europe, export credit agencies (ECA) have evolved from relatively straightforward government agencies with mandates that were primarily driven by public policy, to entities critical to the conduct of international trade across the globe.

There are a variety of ECA models in existence to meet the evolving needs and expectations of the international business community, including the government lender of last resort model to quasi-commercial agencies and those that are partly privatized.

ECAs offer a variety of products and services and are involved in supporting the full range of trade and commercial transactions—from short-term commodity exports to long-term capital projects and project finance.

Export credit insurers have historically focused primarily on supporting deals involving companies or banks from their home markets. However, this has changed in the last decade in that export credit insurers have, within their mandate, been providing financing to foreign affiliates of home companies while also providing financing to foreign buyers of home products and services.

Indeed, it is increasingly common to see banks supporting exports from one country while seeking export credit agency support from another country.

This occurs for a variety of reasons, from competition on pricing to the availability of different solutions (and/or different pricing) at various ECAs. This trend is commonly seen in large multi-million dollar infrastructure projects led by conglomerates when any one ECA and/or bank is unable to provide the required financing.

Furthermore, by diversifying the sources of financing, these conglomerates benefit from an increase in knowledge, variety of products and services, and risk diversification.

Certain agencies may have particular experience in, or insight about, some countries or markets that allow the ECAs to provide support or insurance in those markets, while other agencies may perceive the risk in that same market as unacceptably high.

Export credit insurance and guarantees and export finance solutions are offered by public, private and hybrid agencies.

Want to learn more about risk mitigation options? Check out the FITTskills International Trade Finance online course.

What’s the difference between private and public sector export credit agencies?

The private sector export credit agencies (ECAs) have been strong in many parts of Europe, and are emerging as a viable option in Canada, the United States and elsewhere.

Most commonly, export credit guarantors and insurers from the private sector are, or are affiliated with, commercial general insurers, but have highly specialized skills in areas related to international trade.

The leading private sector providers today include Atradius of the Netherlands, Coface of France, and Euler Hermes of Germany. Major risk insurers generate annual revenues of several billion dollars.

Many public sector export credit agencies (ECAs) are governed by legislation that defines their raison d’être, the details of the mandate and the oversight framework to which the ECA is subject.

It is not uncommon for public sector agencies to be subject to periodic legislative review, as is the case with Export Development Canada and with the Export Finance and Insurance Corporation (EFIC) of Australia.

Similarly, the Export-Import Bank of the United States (Ex-Im Bank) is subject to congressional oversight in terms of its mandate, competitiveness, activities and financial support or appropriations.

In addition to ongoing reviews by national government authorities, ECAs and their activities are closely scrutinized under the increasingly rules-based trading system, and are subject to regulations set by the World Trade Organization. This is because ECAs have grown to play a major role in supporting companies resulting in a material impact on international trade.

Why export credit agencies need different models to meet the needs around them

While there are certainly recognized best practices related to the business of export credits and export insurance, there is no such thing as the ideal export credit agency (ECA) model or the ultimate ECA to which all others should aspire.

ECAs evolve very much in context, and as a direct result of the specific needs and characteristics of their primary market.

The spectrum of options includes ECAs that are primarily driven by public-policy objectives and those that are mandated to operate largely on self-funding, commercial terms.

Certain ECAs are driven primarily by public-policy mandates and are, accordingly, funded by their national governments. These agencies are often lenders of last resort, and may focus on providing a combination of risk insurance, guarantees and financing.

Public policy objectives may be as focused and straightforward as the stated objective of promoting and enabling exports, or they may relate to requiring a level of national content in exported goods as a proxy for assuring that some national benefit accrues as a result of the publicly supported and funded export activity.

Public policy objectives may also extend into market development, international development and aid, as well as other areas where the support of trade may be an important enabler—regardless of whether it is commercially viable.

Certain ECAs such as the Export-Import Bank of the United States (Ex-Im Bank) are expressly forbidden as a matter of policy from competing with private sector providers. Unlike other agencies, the Ex-Im Bank must proactively exit or cease certain activities, including direct lending, when it becomes apparent that a private sector provider is prepared to engage in those activities.

Understanding hybrid models and the changing mandates of export credit agencies

Other ECAs are driven by a mandate that combines an element of both public policy and commercial viability, resulting in a type of hybrid model.

For example, Export Development Canada (EDC), the export credit agency of Canada, is fully self-funded and operates much like a commercial operation. At the same time, EDC remains a Crown corporation, and is often a supporter or instrument of public policy, as required by the EDC Act and the regulations that support the Act.

It is worth noting that EDC operates generally on commercial principles but can secure financing at favourable rates because of its status as a Crown corporation, which effectively means that it is treated by the market as sovereign or government risk, not as commercial risk. In many international transactions, this allows EDC to assist exporters with government bids.

Some ECAs have been restructured such that the short-term insurance side of the business has been privatized and separated from the export finance component. While most ECAs continue to focus on country and bank risk, a recent evolution in the industry is that ECAs are beginning to underwrite corporate risk, such as Export Risk Guarantee (ERG) of Switzerland.

Similarly, ECAs are taking a much broader view of their role and mandate and are shifting away from narrow definitions, such as ensuring minimum levels of national content in exports to targeting activities that generate national benefit.

Just like other providers of services related to international trade, such as trade finance banks, ECAs face significant challenges in terms of the organizational scale and geographic scope required to maintain operations. This is particularly true if these operations are required, based on the mandate of a given ECA, to be financially viable and self-sustaining (recall that not all ECAs are held to a standard of financial viability).

At the highest level, the wide range and variety of ECA models and modes of operation provide exporters and importers with a variety of financing, insurance and guarantee options suited to a wide range of transactions across the globe. Equally true, however, is that the variety of models, objectives and mandates complicates the process of aligning ECA standards through vehicles such as the OECD arrangement and others.

The objective of levelling the playing field in international trade becomes difficult in proportion to the variety of models that exist and evolve relative to ECA operations.

The post What are export credit agencies and what role do they play in international trade? appeared first on Trade Ready.