Treasury Management Advisor

> March 2011The top three key financial factors to export growth

U.S. exports are predicted to outpace GDP in 2012, with forecasted growth of 5 percent to 6 percent, contrasted to anticipated GDP growth of 2.5 percent to 3 percent. Agricultural exports alone grew in excess of 17% last year. Many U.S. companies are driving additional revenue growth by looking to international markets. There are three important financial considerations to note when expanding your business beyond U.S. borders: credit risk mitigation, currency risk and sales terms.

Credit Risk Mitigation: Will international clients pay as agreed? Considerations for payment risk are different, or at least magnified, when selling outside of the U.S. Whether the risk is real or perceived, it represents a major obstacle for many U.S. firms to overcome. Though most international buyers intend to pay, there are several reasons export sales payments can be riskier than domestic sales. Risk factors include political and economic environments in the buyer’s country, transit issues with cargo, and lack of legal recourse for non-payment. Traditional trade solutions such as Letters of Credit, Documentary Collections and Export Credit Insurance help ensure you get paid while minimizing risk. They also have the added benefit of offering your buyer the opportunity to purchase goods and services on a “pay upon receipt” basis, or to obtain extended payment terms from your company.

Currency Risk: How do you mitigate the risk of being paid in foreign currency?Often, currency risk is a primary reason U.S. companies are not exporting even if they have sales opportunities in foreign markets. Their concern for foreign exchange exposure significantly limits their potential by excluding those

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Exports by the numbers

Over 97% of U.S. exports are handled by small business

One in three manufacturing jobs and one in five agricultural jobs are directly tied to exports

8 Leading U.S. ports within Regions’ footprint include Houston, Tampa, Mobile, Savannah, New Orleans, Jacksonville, Miami and Ft. Lauderdale.

2011 top 10 export markets were Canada, Mexico, China, Japan, United Kingdom, Germany, South Korea, Brazil, France and Taiwan

2011 exports totaled a record

$1.5 trillion

Treasury Management Advisor

> March 2011

buyers unable to pay in U.S. dollars. Willingness to accept foreign currency as payment is especially important when doing business in more developed markets, such as Western Europe, Canada, Australia, Japan and China. When dealing in foreign currencies, value fluctuations are commonly managed via foreign currency hedging. Hedging strategies allow you to lock in your profit margin at the front end of each deal.

Sales Terms: How do you extend terms to foreign buyers to ensure you close the sale?In some countries high interest rates and a buyer’s lack of liquidity restrict their ability to pay you on the same terms as a domestic buyer. To facilitate the terms needed, there are options available to finance the receivables from these foreign buyers, allowing earlier payments and expanded markets from these overseas buyers.

Through government trade programs (e.g., Ex-Im Bank and SBA) as well as other private sector solutions, you will find options available to obtain working capital to profitably capture your international sales opportunities. Contact Regions Global Trade Finance to learn more, or visit regions.com > Banking Solutions > Global Trade Finance.

Regions International Trade

fast facts:> Providing global trade advice

and service since 1921

> A top 10 Ex-Im Bank lender

> Winner of the 2011 Greenwich Excellence Award for International Service in Small Business Banking

> Dedicated Global Trade Finance specialists available to assist with your export needs

Export resources:www.regions.com/commercial_banking/int_banking.rf

www.exim.gov

www.sba.gov

www.export.gov