The U.S. Commercial Service provides
a number of services designed to help
small and medium-size businesses expand international sales. With trade specialists in more than 100 American cities,
the primary thrust of the U.S. Commercial
Service is to help equip businesses with the
knowledge and tools necessary to navigate
the foreign market.
Over the past several years a confluence
of factors — including free trade agreements, technological advancements and
U.S. government programs and partnerships — have converged to simplify the
export process. According to Caroline
Brown, first vice president at Comerica
Bank, now is the ideal time for businesses
to engage in exporting.
“A company can increase its sales and
margins significantly by entering the
export market,” she says.
Smart Business spoke with Brown about
the U.S. Commercial Service, the services
it provides and how a company can secure
export financing.
What is the U.S. Commercial Service?
The U.S. Commercial Service is the trade
promotion arm of the U.S. Department of
Commerce’s International Trade Administration (ITA). To increase trade and
investment, ITA helps small and mediumsize companies navigate foreign markets
by providing counseling and acting as an
advocate throughout the exporting
process. Its services include market
research, trade events that promote a company’s product or service to qualified buyers, introductions to qualified buyers and
distributors as well as counseling. In some
cases, it provides guidance to companies
that are already exporting and are looking
to broaden their market. Other times, it
works with companies that are new to
exporting and have no experience at all.
How does the U.S. Commercial Service partner with corporate organizations to build
awareness of exporting opportunities?
Because the U.S. Commercial Service is a
government agency and has limited
resources, it partners with other entities
through innovative government-private
sector partnerships. The Partnership
Program is based on a ‘force multiplier
effect.’ By using each other’s organization,
data bases and global/regional networks
they are able to reach as many small and
medium-size enterprises as possible.
Under the Partnership Program, seminars
are co-sponsored to support the domestic
and international marketing efforts of
these enterprises. Topics vary from basic
seminars to market or industry specific
issues. A popular alternative to the traditional seminar is the webinar, a seminar
conducted on the Internet and telephone.
How are corporate partners selected?
The U.S. Commercial Service looks for
corporate partners that are considered to
be best in class, have a recognizable name,
are regionally or globally strong, and are
involved with international trade and business. Also, corporate partners must possess a significant customer base that is
either currently seeking to expand its international business or seeking to enter the
international business field.
How can a company secure export financing?
Financing is an important component for
companies expanding into exporting.
Typically, companies know their product
and tend to focus on the marketing aspect.
However, it is also important for companies to think about financing very early in
the transaction — not after they have
closed a deal, received an order or finalized
a price.
Trade cycle financing can cover everything from the purchase order stage all the
way through the collection cycle — or it
might involve financing one portion of the
transaction. In working with exporters, we
supplement our programs with government-established programs that can guarantee a portion of the risk for us. Two programs that have been very helpful to
exporters we work with are loan guarantees offered by the Export-Import Bank of
the United States (Ex-Im Bank) and the
Small Business Administration (SBA).
In some cases, companies have to hold
their product for inventory purposes, sell it
to a client on open account and wait to collect. When you are exporting, as compared
to a domestic transaction, the trade cycle is
going to get larger because the company
you are doing business with is located
much farther away. This creates gaps in
working capital. We help finance export
transactions by making short-term working capital loans that are guaranteed by
either Ex-Im Bank or the SBA. The loan
proceeds can be used, among other things,
to cover overhead, labor costs and purchase of the goods.
What other options are available?
Exporters may need foreign credit insurance, which is very useful in mitigating risk
on foreign transactions. Export credit
insurance policies protect against both the
political and commercial risks of a foreign
buyer defaulting on payment. In addition to
the risk mitigation, insured receivables can
be used to obtain bank financing.
CAROLINE BROWN is first vice president at Comerica Bank. Reach her at (562) 590-2525 or [email protected]. Comerica Bank
has recently entered into a formal partnership with the U.S. Commercial Service to expand the outreach to more potential exporters.
