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Selecting Great International Bankers & Freight Forwarders

By David Gulley

Characteristics of a "Great" Banker

Making a deal is one thing...getting paid is another. Although many exporters are able to demand cash-in-advance, this is often not a good long-term strategy since many foreign buyers can find competitors willing to extend credit. Typically the financing burden is on the seller█especially for major projects. Unfortunately, the client's regular bank may be wary of getting involved in international deals. The firm may instead have to shop around for export financing support. Who can a business trust to bear this responsibility? The firm's local banker can be a conduit to the network of international banking services, or it can go directly to the international bank. A firm knows they have a great bank to manage international transactions if it has many or all of the following characteristics:

  1. Bankers that are alert to potential problems█acts as their advocate;
  2. Bankers experienced in international finance;
  3. Bankers that can explain things in non-technical terms;
  4. Willingness to let the client speak directly with the bank actually handling the international transaction;
  5. Has its own international department (not just a Letter of Credit division);
  6. Has offices in major overseas markets, and/or a branch in the target market;
  7. Produces credit reports on the target country;
  8. Has a well-developed correspondent banking system;
  9. Can construct a foreign exchange hedge;
  10. Can offer a range of services (not just Letters of Credit);
  11. Knows how to advise clients in inter-company transfer techniques;
  12. Is willing to train the firm (i.e., offer seminars);
  13. Can build an expert support team of service providers (refer to good CPAs, etc.);
  14. Is an expert in the given industry;
  15. Is comfortable with the firm' s size, age, etc.;
  16. Is willing to make a loan;
  17. Able and willing to use a government support program (i.e., Eximbank);
  18. Has a domestic relationship with an internationally experienced U.S. bank; and/or
  19. Is a foreign bank and truly has a presence to conduct commercial banking operations.

Characteristics of a "Great" Freight Forwarder

Getting the goods or samples or testing equipment█to the right place at the right time is essential for good customer relations and just plain getting paid. Transporting merchandise is often complex, expensive, and highly susceptible to error, delays, and unplanned expenses. Taking and processing orders, even from established customers, can be equally complex and ruinous if not handled with care. Many firms also must be adept at tracking and documenting the source of their inputs for purposes of fulfilling origin-of-content regulations. The paperwork, in other words, must be well managed from start to finish. It can make or break the profit margin. What is an exporter to look for? Because entry into the freight forwarding business is pretty open, quality is hard to gage. Finding a good one is often a trail-and-error process. The focus group suggested, however, that forwarding services are not that expensive, and this is not the place to skimp on costs. They further indicated that a great freight forwarder should have many or all of the following characteristics, some of which may require making phone calls and other investigations:

  1. Willingness to take responsibility for ensuring documents are filled out accurately;
  2. Experience with a wide variety of situations;
  3. A good relationship with carriers;
  4. A good reputation with U.S. Customs;
  5. A good track record in serving other customers in the particular industry sector;
  6. A good track record in serving the market to which the firm is selling;
  7. In-depth knowledge of tariffs and Inco-Terms;
  8. Good working access to a network of related support services, such as packing firms, banks, etc.;
  9. A good report from their insurance company regarding claims;
  10. Haz-mat certification, if the product is a hazardous material;
  11. Documentation on their expertise;
  12. Willingness to be flexible;
  13. Willingness to train the company; and
  14. Willingness to refer the company to another forwarder when a shipment is out of its league.

Tools

According to the National Institute on Standards and Technology (NIST), a tool is "any formalized means to improve the process of client intake or service delivery. This broad definition includes: client management systems, checklists, assessment procedures, templates, and other ways to codify the experiences gained in delivering a particular service." For more on NIST's tools, look up www.mep.nist.gov.

The Chicago Manufacturing Center (CMC) is one of the leading Manufacturing Extension Programs (MEPs) in the area of international business development. NIST has tasked the CMC with developing a process that will enable other MEPs to take advantage of existing services, develop new services if appropriate, and work collaboratively with other MEPs and trade programs to maximize effective service delivery. CMC already works with INC█profiled in this newsletter█on certain projects. Eventually, the CMC hopes to work with other MEPs to build a worldwide network to promote business matchmaking and strategic alliances.

Although CMC staff have a lengthy track record in forging successful international deals, it was agreed that additional input from experienced public and private service providers was needed to help sketch out a framework for assessing client needs and finding sources of assistance. Over the course of two separate two-day meetings held over the winter, some 50 international bankers, lawyers, trade consultants, and freight forwarders met with CMC staff to construct a service framework.

Reprinted with permission from the Southern International Trade Council. Written by David Gulley, Great Cities Institute and Chicago Manufcaturing Center (CMC).For more information about the CMC or the focus groups, contact him at 773-265-2029 (dgulley@uic.edu)

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