|May 2000; Vol. 9 Issue 5|
|The Resource for Small and Emerging Businesses|
www.kcsmallbiz.com • www.thebizstream.com
|In Focus International Business:|
Exporters have specialized banking needs that often are best met by a pair of banks: one to handle international processes, and one to keep your local affairs in order.
When a business or sailboat is venturing into uncharted waters, having essential provisions available as well as answers to the many directional questions that will arise can be the secret to staying afloat.
This is probably one of the major reasons that firms don't pursue their global marketing potential they fear the unknown and aren't sure how to conquer it. But with a "team" of export experts available to assist, no firm should hesitate to take advantage of additional sales from international markets.
Put together step by step, this important team is going to need professionals such as a forwarder for developing shipping procedures; a lawyer for developing an agent/distributor contract; an accountant for considering a foreign sales corporation (FSC); an export packer for preparing or packing products for overseas shipment; and an insurance agent for insuring shipments and receivables.
At the start of the list, however, should be an international banker for getting your money from the foreign companies you hope to develop relationships with and sell to.
That's probably the foremost role initially of the international banker: assisting firms with their methods of payment for international sales. And, once a firm becomes acquainted with basic export methods of payment, the international banker continues to provide key services to assure the success of the export sale.
Ironically, this is also often an area of initial conflict that arises for the company that is new to exporting. What does that mean? Actually, it's a rather simple situation that tends to create more problems than it usually warrants.
Therefore, once a firm begins exporting and turns to the bank for assistance, a conflict can arise as to which bank to use. And since "international" banks tend to be larger than most "local" institutions, they tend to be perceived by the local bank as a threat (that is, as competitors for the business of the client firm). This often results in the local bank using their established relationship to provide assurance that they can take care of the firm's international banking needs. And they can, but not in their own bank!
In this situation, they too will use a bank that has an international staff, qualified to handle the specific needs of international payments. And then the process has another party involved, and usually leads to more potential for confusion.
In addition, much of the international banking process is done through correspondent relationships that the international bank has established in key countries around the world. The local bank will not have these types of relationships, because they have no need for them. So using the "local" bank for international banking purposes tends to complicate a situation that is critical to the firm that is new to exporting.
This sounds simple, and actually it can be. But realize that to accomplish this "best case" solution might require some special political efforts on the part of the firm that needs a full range of banking services. In this situation, it's incumbent on the firm to assure the local banker that their relationship is not jeopardized, rather than the opposite.
Not all local banks have problems with their client firms using dual banks for specific banking needs. But it's enough of a problem that the would-be exporter should be aware of the possibility and take that into consideration when selecting an international banking resource.