Case Study: Valley National Bank’s Trade Finance Partnership
It’s time to start handling business internationally
International trade for some companies can be a daunting but sometimes necessary step in increasing sales and finding lower cost suppliers. Competition is no longer local or even domestic. US companies are often competing on a global level and must develop strategies to remain relevant and profitable internationally.
Companies should be on the lookout for international business opportunities to expand their horizons. With this, they will need to formulate and finance international business plans to become successful internationally. This process is thorough and may take time to fully understand and fulfill.
Understanding that international trade is no longer the exclusive domain of multinationals, Fortune 500 companies and publicly-traded conglomerates. An increasing number of companies are doing business overseas. They may be buying from overseas or selling overseas, and in some cases both!
The trend toward global business expansion will continue, because over 94% of customers worldwide live outside the United States. There are certainly more and more opportunities for small businesses and middle market clients to grow their business outside the United States.
Let’s talk about the basics
There is an abundance of information that you should become familiar with before diving into the waters of trade finance
Some terms to become familiar with include:
- Global trade: Simply put, this terms the international activity among a buyer (known as the importer) and a seller (known as the exporter). The international trade itself is the exchanging of capital, goods and services across international borders due to the necessity or the desire for particular goods and services.
- Trade finance: This term is the umbrella for a set of techniques and financing capabilities with the sole purpose of mitigating and transferring trade risks from a commercial party to the financial sector.
- Foreign exchange: This type of exchange has to do with changing one country’s currency to that of another country. As different countries have different currencies, it is important to be able to convert the various forms of currency.
With that being said, there are two types of foreign exchange products:
- Spot: This type of transaction allows the company to buy or sell currency as needed where prices are easily determined.
- Forward: This refers to the process of buying or selling one currency against another then settling at a predetermined date in the future.
Why should businesses start looking across borders?
Businesses should be focusing on international business as strong opportunities are created for all those involved.
Exporters: Exporters are provided with access to global markets which is vital for driving sales and growth.
Importers: With this, importers are able to expand their supplier base which allows for a more diverse and profitable business model.
Steps for shifting gears
Companies who decide to engage in international business are often under the misconception that you must hire a high-priced international sales director. However, some companies are very successful in identifying an internal candidate who is motivated and up to the challenge of developing your global strategies. Another option is hiring a college intern from a local college or university to assess and offer an outside fresh perspective for global growth.
When shifting focus, a company must also formulate a functional international sales plan that acknowledges global risk while also considering risks in buyer-sellers, credit, payment vs. delivery, performance, country, currency, documentary, product quality, transportation, regulatory compliance, transaction structure and fraud.
What actions can be taken during global disruption?
From 2020 to the current moment, the global COVID-19 pandemic has shown us that our world and the events that take place can be of utmost unpredictability. No business knew that the COVID-19 pandemic was going to take place and run wild.
In turn, there were no business plans or recovery plans that were generated prior. The pandemic forced business owners to act on a whim and make decisions by the second. Now that we know these possibilities exist, we can plan for their hypothetical reoccurrences.
With what we’ve learned from this, we must understand that it’s important to continue a plan for functionality even during unprecedented times.
In terms of global trade, trade finance and foreign exchange, a business should develop an international business plan that is diverse and allows both the importer and the exporter to create various supplier relationships in multiple countries.
Case Study: Valley National Bank’s Trade Finance Partnership
Valley National Bank has experience in helping all varieties of businesses – from near to far and small to large – take their business overseas.
Valley has created a Trade Finance Partnership with their customers in order to successfully meet their demands and requirements. The team at Valley finds it important to understand their client’s needs first-hand to provide the best assistance. The company provides both local operations and staff expertise, covering the New Jersey and New York City areas.
No matter the size of the business, Valley Bank will meet with their clients and provide them with an experience tailored to their company’s characteristics. Upon meeting with clients and prospects, Valley helps them to address both import and export opportunities that they have missed, already have prepared for or the ones they’ve had a bad experience with.
Each occurrence, good or bad, has the ability to serve as a learning opportunity to better prepare for the future ahead.
Assembling a team of outside free resources – such as the Meadowlands Chamber, Valley Bank, freight forwarder and the US Department of Commerce (to name a few) – can put you on the path to global success.
Dan Fosina is an SVP and division head, corporate banking at Valley Bank as well as the head of foreign Exchange Sales for NJ and PA, with responsibilities including managing several teams of middle market and business bankers and streamlining the FX process. Dan has experience in trade finance, insurance, title insurance, lines of credit and real estate and his teams provide corporate lending products and fee-based services to clients and prospective clients in the tri-state area.
Ralph Bocchino is a VP of trade finance product and sales at Valley Bank, responsible for internal and external sales, product, marketing and sales of trade finance products and services. Over his forty-year career he has been involved in all facets of trade finance from operations to sales.