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Resources for Selecting Payment Methods/International Organizations

International Organizations
International organizations are valuable sources of information. See below.

International Chamber of Commerce – www.iccwbo.org
The ICC is the voice of world business championing the global economy as a force for economic growth, job creation and prosperity. Because national economies are now so closely interwoven, government decisions have far stronger international repercussions than in the past. ICC is a world global business organization that covers a broad spectrum--from arbitration and dispute resolution to making the case for open trade and the market economy system. It helps in business self-regulation, fighting corruption, and combating commercial crime. ICC sets rules and standards (arbitration). In addition, the Uniform Customs and Practice for Documentary Credits (UCP 500) are the rules that banks apply to finance billions of dollars worth of world trade every year. ICC Incoterms are standard international trade definitions used every day in countless thousands of contracts. ICC model contracts make life easier for small companies that cannot afford big legal departments. ICC provides world business recommendations to the World Trade Organization and speaks for world business when governments take up such issues as intellectual property rights, transport policy, trade law or the environment. For a credit manager, Incoterms make international trade easier and help traders in different countries understand one another. To assist risk managers in understanding the areas that the 13 Incoterms cover and the way each one works, the official ICC website now publishes The Preambles each term in read-only format, together with basic information and background. The Preambles do not, however, spell out the obligations of buyer and seller, which are essential to correct use of Incoterms. This information may be obtained by consulting the full published texts of the 13 Incoterms, available from ICC publishers.

International Monetary Fund (IMF) – www.imf.org
Established under the Bretton Woods agreement of 1944, the IMF is involved with stabilizing foreign currency exchange rates, monitoring foreign currency exchange polices, and helping with balance of payment issues related to export earnings. Access to funds requires membership in the organization which is based in Washington, DC.

The International Bank for Reconstruction & Development (IBRD) or The World Bank – www.worldbank.org
Also established under the Bretton Woods agreement of 1944, the World Bank provides funding assistance to credit-worthy developing countries for government supported projects. The funding is made available to companies that submit bids to provide goods and services as outlined in the agreement between the government and the World Bank.

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Resources for Selecting Payment Methods/Industry Organizations

Industry Organizations
Industry organizations are most important resources. For every industry there is an industry organization and most likely publications as well. Many of these organizations have international committees that may be involved in hosting training seminars, networking events, trade missions, and/or government lobbying efforts opportunities. It is important that an international manager become a member of the pertinent industry organization and at the minimum browse the website and publications of the organization. If funds are available and the events are meaningful, an international manager might find that attendance could be very beneficial.

Federation of International Trade Associations – www.fita.org
FITA is a source for trade leads, news, events and links to 7,000 international trade sites. These sites include buying/selling links, market research, job fairs and opportunities.

EISIL (International Law links) – www.eisil.org: this category provides some of the basic primary documents of international law, as well as recommended general websites and research guides. For more specific guides and documents, consult the topical areas of EISIL such as
 * International Economic Law (www.eisil.org/index.php?sid=512639228&t=sub_pages&cat=19),
 * International Environmental Law (www.eisil.org/index.php?sid=512639228&t=sub_pages&cat=18),
 * International Criminal Law (www.eisil.org/index.php?sid=512639228&t=sub_pages&cat=21), and
 * International Human Rights (www.eisil.org/index.php?sid=512639228&t=sub_pages&cat=185),
 * Others listed on the EISIL home page (www.eisil.org/).

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Resources for Selecting Payment Methods/Private Banks

Private Banks
Private banks, as you know by now, are primary sources since they can provide credit information on their (and your) customers and information about what is going on in countries that could have an impact on your credit decision. They may also provide trade loans. Knowledge of trade loans in the banking environment is important to for an international manager to have in order to understand the process since it will have an impact on a customer's ability to obtain financing and deal with debt repayment issues. Banks also provide a broad range of methods for financing international trade transactions. Many companies and financial institutions draw a distinction between trade finance and structured trade finance, applying the former term to those products used to finance short-term transactions. This valuable information is available to bank customers through the international banking department/executives.

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Resources for Selecting Payment Methods/Summary

Summary
There are numerous resources available to the international manager. Every resource provides different benefits and may or may not have a cost associated with it. Take some time to identify the resources, read about the available programs and if possible attend an event hosted by the resource. This will not only make you more aware of the possible benefits but also make your company more visible in the international business community.

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Resources for Selecting Payment Methods/Resources

Resources
Foreign Embassies in the US – www.embassies.org Japanese External Trade Organization (JETRO) – www.jetro.org Hong Kong Trade Development Council – www.tdctrade.com US Dept. of Commerce – www.export.gov Small Business Administration (SBA) – www.sba.gov Export Import (EXIM) Bank – www.exim.gov Centers for International Trade Development (CITD) – www.citd.org International Chamber of Commerce – www.iccwbo.org International Monetary Fund (IMF) – www.imf.org The World Bank – www.worldbank.org Federation of International Trade Associations – www.fita.org EISIL (International Law links) – www.eisil.org The Global Entrepreneur, James Foley, 2nd Edition, Jamric Press, 2004. Directory of International Trade, 7th Edition, Edward Hinkelman, World Trade Press (www.worldtradepress.com).

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Resources for Selecting Payment Methods/Activities

Activity
Assign a different resource to each student in the class. Have each student to the following: 1.	Visit the websites of the resources listed or identify an industry organization that the student is interested in. 2.	Print the home page of the website. 3.	Identify the mission of the organization. 4.	Identify the resources and programs available to businesses. 5.	Identify any other resources or links provided by the organization. 6.	Share his/her findings in class.

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Resources for Selecting Payment Methods/Assessment

Assessment
{For the international manager, banks are -a source of low interest loans for exports. -a source of information on key personnel. +a source of credit and country risk information. -a source for export receivable insurance.
 * type=""}

{The SBA provides US exporters with +loan guarantee programs for export transactions. -low interest rate loans to import components. -direct loans for export transactions. -foreign company profiles.
 * type=""}

{The International Chamber of Commerce created the UCP500 as a -legal and binding guidelines for international transactions. +guideline for international banking transactions. -rules and regulations for international transportation. -guidelines for international insurance.
 * type=""}

{Industry Organizations provide -low cost funding for international transactions. -international receivables insurance. -guidelines for acceptable international business behavior. +events and information to members.
 * type=""}

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Resources for Developing a Financial Plan/A Financial Plan

A Financial Plan
A financial plan consists of sections that will enlighten the reader about the organization. Each section serves a specific purpose to accomplish this task. Many of the sections are not directly related to financial data. The plan should give the philosophy of the company, the way it is structured, its desired goals/ achievements, and the plans to get there. The major sections that follow provide a basic outline for a financial plan:

Cover page and table of contents
The cover page, like the whole document, should be of professional quality. It identifies the preparer and lists the contents. The table of contents allows the reader to skip quickly to the information that is critical to his or her needs. It also provides an introduction to what the organization thinks is important for the reader to know about the business.

Mission statement
The mission statement is often overlooked or given little consideration; yet it sets the stage for the entire plan and should be considered one of the most important parts of the plan. The opening statement describes the objectives and philosophy of the company.

Executive overview
The executive overview provides the opportunity to describe senior management and their qualifications. The decisions of this group will determine the outcome of the plan. It is important that this section to cover the experience, education, background and successes of senior management.

Executive summary
This statement justifies the reason for the preparation of the plan and assists a reader in quickly determining whether to proceed. The writing of this section must be consistent with the objectives of the company. Caution should be taken in the preparation of this statement to know the specific needs of a reader who is examining it.

Organization chart
The organization chart is a visual presentation that provides a look at the size of the organization, its efficiency and potential succession. Succession is critical for providing continuity within an organization since most objectives are met over the long term.

Product and market overview
Here the way the business operates is detailed. This presentation also demonstrates where the company fits in relationship to other competing businesses.

Market analysis and potential
The potential market and ways to capture additional market share are critical to meeting all objectives of the company. This section identifies the size of the market, the market share expected, distribution methods, pricing, customer support, promotion and anything else that lends credibility to the projections.

Funding rationale
Here the case for funding is made.

Financial statements
The financial statements are often considered to be fixed in nature but can be presented in many ways. Financial statements should tell a story clearly and highlight the company’s strengths. Doing such requires both art and skill, which take time to develop. Always consider the reader foremost since the document is an appeal for that reader to become financially involved with the company.

Source materials
Include all the research materials that support the financial plan.

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Resources for Developing a Financial Plan/Presentation and Customization

Presentation and Customization
Presentation of a plan is of great importance. The presentation should capture the audience to solidify a commitment to proceed. Careful consideration should be given to the following for the delivery of the plan:

Presentation skills
Be sure to know the targeted audience. It is critical to the success of the plan to know as much as possible about the potential lender, investor, partner or government agency. Presentations often must be altered to appeal to a specific audience.

Clarity of information
The information presented should be clear and concise, answering most questions that can be anticipated from a specific reader. The plan must create confidence in management and the company. It should never be assumed that a reader knows much about the company.

Ability to field questions
Management will often pull together a team to present the plan. It is very difficult for one member of the management team to field all questions. Thus the team needs to be diversified to cover all questions that may arise and also to leave the audience with a strong sense of confidence in management. An inability to field questions can easily be seen as a sign of weakness.

Customization:

 * Banks are going to focus more on the financial data that is presented in the plan. Profitability, positive net worth, relevant ratios and length of time in business are some of the important items of interest to banks.  The higher the risk the lower the interest the banker has in a business.  Banks are in the business of taking on risk, but everything they actually do is centered on risk avoidance.  A company must generate sufficient profits to pay back the loan with interest even if it appears to meet all of the banks requirements.
 * Venture capital firms are generally looking for opportunities for growth and profitability. Marketing studies indicating a sizeable market share that can generate a sizable return will influence them.  They generally want an equity interest with the ability to “cash out” at a later date, often in the form of a stock offering.
 * Government and state agencies are traditionally overworked and have limited resources, so they are dependent upon lenders to screen and submit applications for them. Many lenders have the capability to approve applications on their own; this capability has been acquired after submitting several approved applications.

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Resources for Developing a Financial Plan/Risk Assessment and Risk Management

Risk Assessment and Risk Management
Commercial risk is the risk associated with the individual companies of the buyer and the seller. Information is often the key to managing this risk. A previous lesson explored the preparation of this type of information. Now it is important to be able to read and assess the information gathered.

Commercial Risk
Commercial risk can be evaluated with the assistance of the following:
 * Credit bureaus can provide credit checks, which are mostly effective in industrialized countries. In developing countries, most of the usual financial information is missing and is often more like a reference.
 * Foreign credit insurance providers will approve and assume the credit risk, eliminating the need for heavy investigation.
 * Banks can request a credit check from a prospective client’s bank. This information is generally limited to the length of time they have been a client of the bank, whether they have a credit facility, and whether they are in good standing.  It does not provide information on how they pay their bills.
 * U.S. Department of Commerce – Commercial services can provide contacts with commercial officers located overseas for country analysis. The information provided is generally broad in nature, not specific enough for individual company evaluations.

Balance Sheet Assessment
The review and understanding of the following will help a company evaluate its standing as well as that of any other prospective company.

Liquidity is the ability of a company to pay its bills as they come due. The higher the number, the greater the liquidity.

Another key ratio to determine how quickly a company collects on 	its outstanding receivables is to use the accounts receivable turnover to determine the average collection period.

Leverage is the use of debt to finance the company’s assets. Banks often use a debt to equity ratio to determine if a company can support the requested debt. The higher the ratio, the greater the risk is; if the risk is too high, the company may have to seek a secondary lender such as a factor or a private finance company.

Profitability is important for bill paying and debt servicing. It is also a key factor in determining a return on investment. Comparing the return on assets ratio to other alternative investments provides an objective comparison and evaluates risk with greater precision.

Country risk
Country risk assessment is a key component in the decision- making process when considering funding. Countries are evaluated based on key elements and stability. Companies consider both political and economic factors when making country risk forecasts, because economic hardship and political unrest are closely related.

Political factors that come into play are the frequency of coups, labor unrest, the attitudes toward capitalism, nationalistic tendencies rather than democratic policies, protectionism, movements toward expropriation, the military role in government, political factions within the country, and social and ethnic conflicts.

Economic factors that come into play are inflation rates, unemployment rates, the gross domestic product, fiscal deficits, the availability of natural resources, the balance of trade, the international reserve position and the proportion of the nation’s export earnings needed to service its external debt.

Currency exchange is an economic factor of a country which can have a significant impact on those trading with that country. Not all governments allow their currencies to float freely. The private sector has found many ways to circumvent government in order to trade for desired products. Both political and economic factors will impact the fluctuation of a currency. It is important to monitor and often hedge against this volatility.

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Resources for Developing a Financial Plan/How Do I Qualify?

Private Banks
Banking institutions provide working capital loans, short-, medium- and long-term financing for domestic as well as international operations. Each bank will have established its own criteria against which it will lend to its customers; however, they all require a minimum of two years in business, a positive net worth and consistent annual profitability. The financial plan, collateral, and a relationship with the bank are keys in obtaining funding. The higher the risk is the higher the interest rate. The bank may also decide to partner with the SBA to receive loan guarantees in order to reduce its risk. Each bank will be different in the amount of funding it will provide, the activities it will fund, and the countries it will provide funding to or for. It is important to develop a strong working relationship with your banker to make qualifying for lending a smoother process.

Government programs are often initiated and monitored through a bank. They are established to help an exporter increase exports, which in turn will help the trade deficit. The manufacturing of the product must have a majority material and manufacturing cost of United States content.

Export-Import Bank – www.exim.gov
Ex-Im Bank’s mission is to expand employment and income opportunities through the exports of goods, services and agricultural commodities for small and medium-sized businesses. Ex-Im Bank sets out to achieve its mission by providing guarantees to banks to encourage them to finance foreign exports by US companies. The material at a minimum must be 50% US content. Rates are determined by country risk levels. Country limitations are posted on the Ex-Im Bank website and are broken down into the public and private sectors with length of time limitations, which can range anywhere from less than one year to up to seven years. It is often difficult to finance inventory, but under certain conditions Ex-Im Bank will do so through a bank with its guarantee.

U.S. Small Business Administration – www.sba.gov
The SBA’s programs basically parallel the Ex-Im Bank programs; the main difference is the size of the transaction. It is important to remember that the SBA does not provide loans directly but loan guarantees through local banks. Many states have similar programs to the Ex-Im Bank programs, and often the qualifying requirements are more liberal. They also require a minimum material content for their respective state.

Factoring Companies
Factoring companies (factors) finance transactions when a seller does not meet the minimum bank requirements. They are dependent upon the quality and amount of the company’s accounts receivables. The interest rates they charge can be significantly higher than those of a bank. Receivables can be purchased outright, or they can be financed for the short term that they are outstanding. Foreign receivables are usually insured.

Insurance Companies
Collecting on foreign receivables can be costly and cumbersome. Insurance can eliminate many of these problems. It allows the receivables to be financed by banks or factors. The insurance carrier approves a buyer’s credit before the sale occurs and will assume the responsibility to collect if not paid when due. The seller also eliminates staff to monitor and control the collection process.

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Resources for Developing a Financial Plan/Summary

Summary
The international marketing manager is required to wear many hats. Often the most challenging area is financial. Understanding the components and importance of financial statements, their uses and the terminology associated is a critical step in obtaining funding for international operations and also to maintain a profitable business. Knowing where funding can be found and the requirements to receive such funding will help international operations function smoothly.

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Resources for Developing a Financial Plan/Resources

Publications
Exporting from Start to Finance 3rd Edition, L. Wells and K. Dulat, McGraw Hill. The Global Entrepreneur, James Foley, 2nd Edition, Jamric Press, 2004. FITT Skills International Trade Finance Participants Manual, V.4. Forum for International Trade Training (FITT), Ottawa Canada.

Web Resources
www.sba.gov (click on Support your business with a team of experts) www.exim.gov (click on U.S. Exporters) http://tefo.com www.missionstatements.com/fortune_500_mission_statements.html

Attachments
Calculating Cost

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Resources for Developing a Financial Plan/Activities

Activity 1: Project
(minimum 4 weeks) Students should create a financial plan out of the information provided below, as either an individual or a group project. The objective of each financial plan is to seek funding for the penetration into any one to three major new country markets of their choice. The country choices can be determined by the evaluation of five countries (dependent upon the number of members in the group). Select one to three from the five based on preliminary research. Once the country (ies) are chosen, the students will prepare a financial plan to seek funding for the project based on the given details as provided for the activity. Should time permit, the members can present their plan to the other groups.

The following instructions should be given to the members of each group.

Instructions
You are to prepare a financial plan for Global Meat Distributors, Inc. (a fictitious company) based on the sections and information provided below. It is important to include all sections in order to have a complete plan.

Mission Statement
The mission statement should be written to present the goals and objectives of the company. Some examples follow: AFLAC - Mission Statement To combine aggressive strategic marketing with quality products and services at competitive prices to provide the best insurance value for consumers.

ALBERTSONS - Mission Statement Guided by relentless focus on our five imperatives, we will constantly strive to implement the critical initiatives required to achieve our vision. In doing this, we will deliver operational excellence in every corner of the Company and meet or exceed our commitments to the many constituencies we serve. All of our long-term strategies and short-term actions will be molded by a set of core values that are shared by each and every associate.

AMERICAN STANDARD COMPANY- Mission Statement American Standard's mission is to "Be the best in the eyes of our customers, employees and shareholders."

AVON - Mission Statement The Global Beauty Leader: We will build a unique portfolio of Beauty and related brands, striving to surpass our competitors in quality, innovation and value, and elevating our image to become the Beauty company most women turn to worldwide.

The Women’s Choice for Buying: We will become the destination store for women, offering the convenience of multiple brands and channels, and providing a personal high touch shopping experience that helps create lifelong customer relationships.

The Premier Direct Seller: We will expand our presence in direct selling and lead the reinvention of the channel, offering an entrepreneurial opportunity that delivers superior earnings, recognition, service and support, making it easy and rewarding to be affiliated with Avon and elevating the image of our industry.

The Best Place to Work: We will be known for our leadership edge, through our passion for high standards, our respect for diversity and our commitment to create exceptional opportunities for professional growth so that associates can fulfill their highest potential.

The Largest Women's Foundation: We will be a committed global champion for the health and well-being of women through philanthropic efforts that eliminate breast cancer from the face of the earth, and that empower women to achieve economic independence.

The Most Admired Company: We will deliver superior returns to our shareholders by tirelessly pursuing new growth opportunities while continually improving our profitability, and be a socially responsible, ethical company that is watched and emulated as a model of success.

Executive Overview
The CEO Anthony Masters executive profile which is provided below should be copied into the financial plan. Each member should create an executive profile based on his/her personal education and experience. Do not be concerned that a profile does not meet the needs of the financial plan. This exercise is intended for each member to reflect on his/her personal experience. Executive Overview for Anthony Masters Anthony Masters, Chairman

Widely known as an industry leader in the meat distribution industry, Anthony Masters is a Certified Public Accountant holding a master’s degree from Harvard Business School. Prior to starting Global Meat Distributors, Inc., he worked as an auditor for several distributors. Mr. Masters recognized the need for global distribution of beef and started 15 years ago Global Meat Distributors, which now controls 30% of all global distribution of beef from the United States. He has held the position of chairman on the National Meat Distributors board and is involved with several committees advising the President of the United States.

Some titles that each member may take follow:
 * Chief Executive Officer
 * Chief Operating Officer
 * Chief Information Officer
 * Chief Financial Officer
 * Vice President of Sales and Marketing
 * Vice President of Distribution

Executive Summary
This summary should be no more than a one page. It should briefly explain what the members evaluated and the outcome of that evaluation. It should support the need for funding and penetration of new markets that are recommended. Include any market segments that were rejected during the evaluation process and reasons why they were rejected. Remember this summary is a compilation of the sections that follow it.

Organization Chart
Create an organization chart consistent with the titles utilized in the executive overview section.

Product and Market Overview
This section can be developed from the assumptions made in the market analysis and potential section. This section should include facts about the company such as the following:
 * All beef is born and raised in the United States.
 * All beef is fed natural grains with no hormones or additives.
 * All beef is slaughtered in a humane way.
 * Domestic distribution is the fastest in the nation.
 * The company supplies 30% of all beef distributed in the United States.
 * Inclusion of any current overseas markets where there is distribution and the success of market penetration

Market Analysis and Potential
Evaluate the potential country(ies) as requested. The analysis should include the following:
 * Country demographics that pertain to the distribution of your product, such as ports, roads, railroads and any logistical problems that might be present
 * Per capita income that would enable people to buy your product
 * Cultural issues that might impact the population’s decision to buy your product (religious, vegetarian, etc.)
 * Any marketing issues that may influence the purchase of your product, including the treatment of the animals through the growth and slaughtering process, the way the cattle were raised, the local competition and any product and/or packaging adjustments that may be required.
 * Any political issues between the United States and the country in question that would influence your ability to penetrate their markets.
 * The ability to convert their currency to US dollars and repatriate your profits
 * The ways you intend to distribute the product by contracting with a distributor or through direct sales with your own sales force.

Funding Rationale
Here build your case for the funding required to meet the objectives set forth in your market analysis and potential. This section should include all entities from which the company can seek funding: Ex-Im Bank, SBA and insurance programs. Explain the ways to qualify for each.

Financial Statements

 * Global Meat Distributors, Inc.
 * Balance Sheet
 * December 31, 20XX
 * (000's omitted)
 * Current Assets
 * Cash..................................................................................................$150,000
 * Inventory............................................................................................1,785,000
 * Prepaid Income Taxes.............................................................................35,000
 * Deposits.................................................................................................  1,500
 * Total Current Assets...................................................................$1,971,500
 * Current Liabilities
 * Accounts Payable................................................................................$800,000
 * Note Payable to Bank...........................................................................  400,000
 * Total Current Liabilities................................................................$1,200,000
 * Long Term Liabilities
 * Subordinated Debt................................................................................$150,000
 * Stockholders' Equity
 * Common Stock........................................................................................$3,000
 * Retained Earnings
 * Current Year..................................................................................$169,400
 * Prior Year.......................................................................................  449,100
 * Total Stockholders' Equity...............................................................$621,500

 * Global Meat Distributors, Inc.
 * Income Statement
 * December 31, 20XX
 * (000's omitted)
 * Sales.......................................................................................................$7,700,000
 * Cost of Sales............................................................................................. 7,000,000
 * Gross Profit.........................................................................................$ 700,000
 * Selling and Administrative Expenses.............................................................. 440,000
 * Operating Profit......................................................................................$260,000
 * Bank Interest.................................................................................................. 36,000
 * Pretax Profit..........................................................................................$242,000
 * Income Taxes.................................................................................................. 72,600
 * Net Profit...............................................................................................$169,400

The following ratios should be calculated using the information provided on Global Meat Distributors, Inc.:
 * Current ratio
 * Quick ratio
 * Accounts receivable turnover
 * Average collection period
 * Debt to equity ratio (the subordinated debt listed on the balance sheet is a loan to the company by Anthony Masters and should be removed from the debt section and added to the equity for the calculation of this ratio)
 * Return on assets

Source Materials
Include in this section all research materials used.

Activity 2: Internet Research
This is a much shorter activity and can be used in conjunction with the project above or as a separate assignment.

Have each student visit the websites for:
 * Ex-Im Bank
 * SBA
 * One Factoring Company (one the student finds)
 * One Private Bank (one each student finds, each selecting a different bank)

Identify the funding available from each organization and the requirements for funding.

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Resources for Developing a Financial Plan/Assessment

Assessment
{Export-Import (Ex-Im) Bank of the U.S. country limitation schedule indicates the term and availability for +the private and public sector for terms of up to one year, one to seven years and over seven years. -the public sector for terms of up to one year, one to seven years and over seven years. -the private sector for terms of up to one year, one to seven years and over seven years. -the private and public sector for terms of up to one year and one to seven years.
 * type=""}

{Ex-Im Bank has a minimum United States material content. Which of the following percentages meets that requirement? -50% +49% -15% -30%
 * type=""}

{What best describes why export credit insurance is purchased? -to provide a product warranty in the event there is a dispute about the product delivered -to provide protection against political upheaval only +to provide a guarantee that the product shipped will reach the final destination -to provide financing options, protection of payment terms, to cover political and commercial risk
 * type=""}

{Ex-Im Bank’s mission is to expand employment and income opportunities through -imports of goods, services and agricultural commodities for small and medium size businesses. -imports and exports of goods, services and agricultural commodities for small and medium size businesses. +exports of goods, services and agricultural commodities for small and medium size businesses. -providing direct funding for all businesses that export products that are manufactured entirely in the United States.
 * type=""}

{All banks have different requirements for lending money to businesses, but their minimum requirements to support a loan when the collateral is exclusively tied to the business are -minimum of two years in business, a positive net worth, and unprofitable annual income. -minimum of two years in business, a negative net worth, and profitable annual income for the past two years. -new business with a positive net worth. +minimum of two years in business, a positive net worth and consistent annual profitability.
 * type=""}

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Forms of Short-term Financing/Preparing to Borrow Needed Funds

Preparing to Borrow Needed Funds
Financial statements must be available for internal and external purposes. The financial statements represent the company and tell the story of its history to others. Companies with good financial statements have a better chance of getting credit from all available sources. The better the financial statements are, the lower the credit risk is, creating more favorable financing options for a buyer. To qualify for any financing option, a buyer will need to meet the requirements of the funding provider. The company’s financial plan determines what options will be available. Thus understanding and properly preparing a good financial plan is primary. It is not essential to understand a balance sheet in its entirety, but it does help to have an understanding of the relationships between some of the items listed on the balance sheet and income statement since lenders look very carefully at these relationships. The key matter is the relationship of the accounts receivable to sales and the transition to cash:
 * Accounts receivable are a desirable asset. Banks and factors scrutinize these because accounts receivable provide collateral for the basis of a loan.
 * Sales are the outcome of extending payment terms which then create accounts receivable.
 * Inventory is decreased, and cost of sales is increased.
 * Cash is generated when a buyer pays the obligation (accounts receivable).
 * Sales are the primary goal, and profits are the desired end results.

The end result of the difference between sales and cost of sales is loss/ profit that flows into the company (debit if loss, credit if profit).

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Forms of Short-term Financing/Vendor Financing - Payment Terms

Open Account
Vendors are the suppliers of raw materials that are used in the production of inventory. It is in the best interest of these vendors to sell as much of their product as possible but only to a qualified buyer. Credit terms provided to a buyer are a key financing option. Most companies do not understand how important it is to have these credit terms available. The vendor or supplier of these materials or manufactured goods is actually financing the company, eliminating the need to go to another financing source to provide funds to purchase these goods. The company that meets its obligations is more likely to be able to obtain additional credit and favorable terms in the future. It is also much easier for a startup company to build a relationship with favorable terms with a supplier or vendor over any other funding source. Each will have specific qualifying criteria, but often a minimum credit facility will be provided to a buyer with a decent balance sheet.

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Forms of Short-term Financing/Documentary Collections

Documentary Collections
Documentary collections allow a buyer to import goods at the risk of the seller. Buyers often pay for the documents when the arrival notice is received. The buyer having paid for the documents, the bank will release the negotiable documents to this buyer, thus allowing for the release of the goods by the carrier. Documentary collections can also be presented with an extended payment bank draft. This form of financing assigns greater risk to the seller because once the buyer accepts responsibility to pay at maturity by signing the bankdraft, the documents are released to the buyer. The title to the goods passes to the buyer, and the only recourse to the seller if the buyer does not pay at maturity is to seek legal recourse. Doing so is costly and time-consuming for the seller. The buyer could provide the seller with a guarantee of payment from his bank by transferring the responsibility for the payment from the buyer to his bank. This action occurs if the buyer’s bank, relying on the credit facility they have with the buyer, avalizes the draft, thereby assuming responsibility for the payment at maturity. It is important for the seller to analyze a buyer carefully before extending credit terms under a documentary collection.

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Forms of Short-term Financing/Bank Check

Bank Check
Payment by check by an overseas buyer provides higher risk for a seller. Checks drawn on foreign banks do not clear through the Federal Reserve Bank. These items must be presented directly to the paying bank and can take up to eight weeks or longer to clear (clearing of checks is different in every country throughout the world). The general desired form of payment should be by wire transfer into the seller’s account at the designated bank. The second form is to accept a check drawn on a United States bank in US dollars, which allows you to collect your US dollars through the Federal Reserve Bank under laws of the United States clearing laws. Checks drawn on foreign banks require collection procedures through the banks and can easily be returned for insufficient funds or stop payment. The collection of a foreign check also takes so much time that the seller will have difficulty in applying other collection procedures against a buyer in a foreign country.

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Forms of Short-term Financing/Personal Resources

Personal Resources
Startup companies have difficulty raising money until some performance history is created. Prior to the establishment of solid financial data, a startup is dependent upon the personal resources of the owner or investors in the company. Private investors expect to have a return on their investment and the ability to sell that investment at a future date. The owners raising capital from private investors give up a portion of their business in the form of an equity interest to the investor, which dilutes the holdings of the existing owner(s) of the company. Banks always expect owners and investors to step in with additional funding first before increasing credit lines in emergency situations.

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Forms of Short-term Financing/Bank Financing

Letters of Credit
Letters of credit are often used to finance purchases in a foreign transaction. Letters of credit are the guarantee of payment by the buyer’s bank (not the buyer) to pay provided the terms of the letter of credit are strictly met. Letters of credit can provide extended payment terms and still provide a guarantee of payment by the buyer’s bank, by accepting to pay the draft at maturity. This action is the source of a banker’s acceptance, which draws its name from the accepted draft. A banker's acceptance is a method of financing that banks can use to provide customers with short-term (six months or shorter) financing for trade transactions. A banker's acceptance is a time draft drawn on and accepted by a bank. The bank indicates its commitment to pay the stated amount of the draft on a specified future date by signing the draft on its face and thereby accepting it. The draft may then be sold to an investor for a money-market rate of return based on the credit risk of the bank. Acceptances may be less expensive than more traditional trade financing methods.

Banker’s Acceptances
Acceptance financing has been used for decades as a form of bank loan. The ability to fix rates for periods of up to 180 days protects a borrower from adverse movements in interest rates up to six months. Banks offer banker’s acceptances in a wide range of maturities to match customers’ sales cycles and payment terms. Traditionally, importers used banker’s acceptances to finance imports into the United States. Today acceptance financing is used to finance a wide- range of activity such as imports, exports, domestic shipments, domestic purchases, and commodity warehousing of readily marketable products.

Discounting
Banker’s acceptances provide a deferred payment option for a buyer but little benefit for a seller. Banker’s acceptances can be discounted to the seller freeing up funds to the seller and providing an additional income opportunity for the discounting bank. The fees and charges for discounting banker’s acceptances can be paid for by either the buyer or the seller. The accepted draft is discounted to the seller who receives a discounted amount from the bank discounting the draft. If the buyer agrees to pay for the discount fees and charges, the seller will receive the full amount of the draft, which is the reason it is important to establish who is responsible for these fees and charges in the negotiation process prior to fixing the product price. It is important to note that discounting can be done by either the buyer’s or the seller’s bank. It is possible that neither will be interested in discounting the draft, but in most cases both are available and should be confirmed before the transaction is finalized between the buyer and the seller. Whether the buyer, the seller, or their banks furnish the financing under letters of credit depends on a number of factors:
 * relative negotiating position of the buyer and the seller
 * availability of financing in the buyer’s and seller’s countries
 * relative interest rates in the buyer’s and seller’s countries
 * relative need of the buyer and seller for financing

Standby Letter of Credit
Standby letters of credit are instruments that stand by to pay if there is non-performance by a party in the transaction. Commercial sellers will accept a standby letter of credit to extend credit and to guarantee payment if the buyer does not pay. It is paid for by the buyer and issued by the buyer’s bank against the credit facility the buyer has with his or her bank. It provides the seller with the comfort of collecting against the standby letter of credit should the buyer not pay according to agreed upon payment terms. The seller should never extend more credit in the form of shipments to the buyer than the amount of the standby letter of credit because the seller is only protected up to the amount of the standby letter of credit.

Transferable Letter of Credit
Transferable letters of credit can be a very valuable financing option but are often misunderstood and improperly executed. The first task is to identify the parties in the transaction. There is an ultimate buyer and an ultimate seller, and between them in the transaction is a broker/sales representative. The broker can represent himself in the transaction or be a distributor for a much larger, well- known company. Using a transferable letter of credit, the broker requires no credit facility or collateral for his role in the transaction, making this action very valuable for the broker.

The process works in the following way: A buyer issues a transferable letter of credit to the broker; then the broker transfers to the ultimate seller of the goods the cost of the goods to be shipped. The seller now has the responsibility to make the complete shipment to the ultimate buyer. The broker will never take title to the goods; it passes directly to the ultimate buyer. The seller of the goods is happy because he/she is a party to the letter of credit and is guaranteed payment by the buyer’s bank. The buyer is happy because he/she receives the goods under strict compliance of the letter of credit (note that this transaction does not prevent fraud). The broker is required only to replace the seller’s invoice with his/her marked-up invoice (the profit) when the seller’s documents are presented to the transferring bank; these documents are in turn forwarded to the paying bank with the replaced invoice so that the broker can secure his/her profit in the transaction. This situation appears to be too good to be true. There is, however, risk. The risk is that the ultimate buyer will be able to identify the seller in the transaction and be able to eliminate the broker. This situation can be controlled by carefully structuring the documents in the preparation of the transferable letter of credit and the packaging of the product. When the broker is a distributor, however, it does not matter that the seller is disclosed.

For example, take the case of a name brand like Levi’s. A buyer knows the maker of the goods but cannot acquire them directly from the manufacturer. The broker is protected by an exclusive distribution contract with the manufacturer (Levi Strauss & Co). The benefits for the broker are now obvious: there is no financing necessary and no need for warehousing a product. The broker has the responsibility for finding a manufacturer for the buyer and preparing an invoice to correspond to the negotiated sale between the ultimate buyer and seller.

Transferable letters of credit should not be confused with a back-to-back letter of credit.

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Forms of Short-term Financing/Export Credit Insurance

Export Credit Insurance
United States banks do not consider foreign accounts receivable to be eligible for financing, the reason being that the recourse to collect against them is limited and expensive. The United States government as well as other governments throughout the world have realized such and established guarantees to banks in the form of payment insurance to stimulate exports. Ex-Im Bank provides United States banks with a guarantee of payment for specific transactions. Some states have created similar local programs. They often work in conjunction with Ex-Im Bank to provide guarantees to lenders to stimulate their local economies. These programs allow banks to lend against a borrower’s inventory and accounts receivable, relying on the Ex-Im Bank or the state program (a domestic source to the bank) to pay in the case of default. This type of guarantee provides insurance of payment.

These programs have been recognized by independent insurance carriers as a potential revenue- generating source, enticing them to enter this market and providing competition for Ex-Im Bank. This free market competition keeps rates low for this type of credit facility and provides alternative sources for a borrower. The guarantee allows the banks to fund inventory; it is limited to Ex-Im Bank and is considered pre-shipment financing. The funding of post- shipment financing is provided by both Ex-Im Bank and private insurance carriers in the form of guarantees to a seller’s bank against accounts receivables.

The range of risk varies from one credit insurance agency to another, but here are examples of some risks covered on a standard basis:

1. Commercial risks only
 * a. company insolvency, including both compulsory and voluntary liquidations
 * b. individual insolvency (bankruptcy)
 * c. protracted default (slow pay)
 * d. receivership
 * e. the appointment of an administrator.

2. Commercial Risks and Political Risks
 * a. commercial risks including the insolvency of a customer and any default on payment (See above)
 * b. financial losses resulting directly from political events, economic difficulties, legislative or administrative measures occurring in a country covered for these risks which prevent or delay the transfer of the sums paid by a buyer or its guarantor (transfer risk)
 * c. risks of a military or a civil war, a revolution, riot or insurrection
 * d. general moratorium decreed by the government of a buyer’s country or by any third country covered for these risks through which payment must be made

3. Political Risks Only
 * a. when the client is worried only about non-commercial issues

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Forms of Short-term Financing/Other Guarantees Linked with an Export Product

Other Guarantees Linked with an Exported Product
The export insurer provides other types of insurance:
 * A global insurance for corporations having subsidiaries abroad. For companies trading internationally, there is a growing trend for overseas sales to be made not from the head office but through a local subsidiary.  The export credit insurer may offer a comprehensive and flexible credit risk management service by providing, through their international network, a cover concerning the local sales of the subsidiaries as well as the head office exports sales.
 * Manufacturing risk guarantee or work in progress. The insurer can provide a guarantee concerning the goods when they are at the stage of being manufactured.  This guarantee protects the exporter against the risk of bankruptcy of the importer or against political/economic risk during the time of manufacturing (before completion and the sale).
 * Bid bonds or performance bonds or advance payments, or retention bonds or guarantees. These guarantee to protect the exporter against any unfair first demand call on those bonds.
 * Goods exposed in foreign political upheaval are guaranteed against the political or catastrophic risk for a maximum of six months.
 * Goods in a consignment stock could be insured for a period of 12 months.
 * Export insurance could be extended as well to the exporter abroad on his behalf. The guarantee is applicable on the final buyer risk.
 * Protection of the investment abroad. A corporation can insure its new production unit in a foreign country against the political cause of loss: expropriation, war, non-transfer.
 * Other coverage, such as, supplier default, breach of contracts, trade fair insurance, etc.

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Forms of Short-term Financing/Ex-Im Bank Financing (Export-Import Bank of the US)

Ex-Im Bank Financing (Export-Import Bank of the US)
Ex-Im Bank programs follow certain policies designed to create US jobs and adhere to US trade policies and regulations. In addition, Ex-Im Bank programs cover a variety of needs, including pre-export and post-export assistance. They also offer short, medium and long-term guarantee insurance and direct loan programs.

Because of its policy constraints, Ex-Im Bank has certain restrictions on utilizing its programs that may prevent some companies from getting support. To insure the creation of jobs in the US, all products must be shipped overseas from the US and support may be limited by the US content of the products. The final manufacturing stage must be in the US and some programs require shipment on US vessels, with few exceptions. No product can be shipped to a military buyer. Aside from these restrictions, however, support is still available for a variety of trade transactions under numerous programs within Ex-Im Bank.

Ex-Im Bank's programs cover a variety of needs, including pre-export assistance, which is offered through pre-shipment insurance and a working capital loan guarantee program. Post-shipment assistance is provided through short, medium, and long-term programs. All Ex-Im Bank's short-term export programs are insurance programs. These include programs to protect sales to an individual buyer (single-buyer insurance) or many buyers at the same time (multi-buyer insurance), including programs designed specifically for small businesses (the small business program and the environmental program). All goods covered under these programs must have at least 50% US content.

Working Capital Guarantee Program (WCGP)
This program gives US exporters access to working capital loans from commercial financial institutions by providing 90 percent repayment guarantees to lenders on short-term loans secured by inventory and foreign receivables. Ex-Im Bank allows exporters to obtain the necessary working capital to purchase inventory, build products, arrange bid and performance bonds, and extend terms to overseas buyers. This program provides the means for small and medium-sized companies to pursue exports more aggressively. A working capital guarantee can be issued for a specific transaction or a series of transactions in the form of a line of credit.

Delegated Authority Program
This program was created to accelerate the process of obtaining a working capital guarantee. Applicants can directly interact with commercial lenders who are extended this privilege without having to approach Ex-Im Bank. There are five levels of Delegated Authority Lenders, each with specific loan limits per exporter. The lowest lender level is limited to making loans of $1 million per exporter, while the highest is able to make loans of up to $10 million per exporter and an aggregate of $150 million. The program permits the lenders to commit Ex-Im Bank to a loan with minimal documentation and provides for the lender to split the guarantee fees with Ex-Im Bank.

Priority Lender Program
Under the Priority Lender Program, a qualified bank is assured faster turnaround for loans of up to $5 million. Qualification for this status requires completion of Ex-Im Bank training programs, completion of at least two working capital loans, and submission of a report every year. This Ex-Im Bank program guarantees its priority lenders that it will make a decision on a pending loan within 10 business days for standard transactions.

Ex-Im Bank offers short-term insurance to cover risks incurred during the pre-shipment (during the assembly or manufacturing) period for export transactions. This period is normally limited to 180 days but can be extended depending on certain factors. This type of insurance covers the exporter against the possibility of a buyer canceling his/her purchase agreement or a foreign government canceling the buyer's import license.

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Forms of Short-term Financing/Small Business Administration (SBA) of the US

Small Business Administration (SBA) of the US
The SBA has some services specifically designed to help the small business get started in exporting. SBA provides financial assistance programs for US exporters. Applicants must qualify under the SBA’s size standards and meet other eligibility criteria. The SBA has two main programs to assist US exporters-- the Export Working Capital Program and the International Trade Loan (ITL) program. It is important to note that the SBA does not provide loans but rather loan guarantees.

The SBA programs provide a small business owner with financing aids that will enable the business to obtain the capital needed to get into exporting. This program is designed to help small business exporters obtain financing by reducing risks to lenders. The SBA will guarantee up to 90% of a loan from a private bank. The proceeds from the loan can be used for pre-shipment working capital, post-shipment exposure coverage, or a combination of both.

Credit managers should understand the basic credit attributes that are part of the SBA package that is funded through a bank and be able to determine if a company can qualify for SBA's financial assistance. The company must understand basic credit factors that apply to all loan requests. Every application needs positive credit merits to be approved. These are the same credit factors a lender will review and analyze before deciding whether to internally approve a loan application, seek a guaranty from SBA to support their loan, or decline the application all together.

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Forms of Short-term Financing/Equity Investment

Equity Investment
Business loan applicants must have a reasonable amount invested in their business to ensure that, when combined with borrowed funds, the business can operate on a sound basis. There will be a careful examination of the debt-to-worth ratio of the applicant to understand how much money the lender is being asked to lend (debt) in relation to how much the owner(s) have invested (worth). Owners invest either assets that are applicable to the operation of the business and/or cash which can be used to acquire such assets. The value of invested assets should be substantiated by invoices or appraisals for startup businesses or current financial statements for existing businesses.

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Forms of Short-term Financing/Earnings Requirments

Earnings Requirements
Financial obligations are paid with cash, not profits. When cash outflow exceeds cash inflow for an extended period of time, a business cannot continue to operate. As a result, cash management is extremely important. A company must be able to meet all its debt payments, not just its loan payments as they come due. Applicants are generally required to provide a report on when their income will become cash and when their expenses must be paid. This report is usually in the form of a cash flow projection, broken down on a monthly basis, covering the first annual period after the loan is received.

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Forms of Short-term Financing/Working Capital

Working Capital
Working capital is defined as the excess of current assets over current liabilities. Current assets are the most liquid and most easily convertible to cash of all assets. Current liabilities are obligations due within one year; therefore, working capital measures what is available to pay a company's current debts. It also represents the cushion or margin of protection a company can give their short-term creditors. Working capital is essential for a company to meet its continuous operational needs. Its adequacy influences the firm's ability to meet its trade and short-term debt obligations as well as to remain financially viable.

To understand Current Assets and Current liabilities: Current Asset are those assets that in a ordinary course of business can be or will be turned into cash within a breif period without undergoing dimunition of value and without disrupting the organisation. Few examples of current assets Cash in hand or in bank, Bills receivable from customers, promissory notes, inventories, work in progress, finished goods, Marketable securities hels as temporary investments, prepaid expenses, Accrued income.

Current Liabilities are those liabilities intended as their iception to be paid in ordinary business course within a reasonable short time out of the current assets or by creating another current liability or the income of the business. Few Examples of Current liabilities are Accrues expenses, Salary, Bonds tobe paid in one year, interests, Dividends declared and payable.

Working Capital = Current Assets - Current Liabilities

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Forms of Short-term Financing/Collateral

Collateral
To the extent that worthwhile assets are available, adequate collateral is required as security on all bank loans; however, banks will generally not decline a loan where inadequacy of collateral is the only unfavorable factor. Collateral can consist of both assets which are usable in the business and personal assets which remain outside the business. Borrowers can assume that all assets financed with borrowed funds will collateralize the loan. Depending upon how much equity was contributed towards the acquisition of these assets, the lender also is likely to require other business assets as collateral. Although banks may require all, SBA loans definitely require personal guarantees by the owner or other individuals who hold key management positions.

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Forms of Short-term Financing/Resource Management

Resource Management
The ability of company officers to manage the resources of the business, sometimes referred to as character, is a prime consideration when determining whether or not a loan will be made. Managerial capacity is an important factor involving education, experience and motivation. A proven positive ability to manage resources is also a large consideration.

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Forms of Short-term Financing/Primary Difference Between Ex-Im Bank and the SBA

Primary Difference Between Ex-Im Bank and the SBA
The Ex-Im Bank program offers exporters more flexibility and a desire to see that businesses in the US create jobs and increase exports. They also offer short, medium, and long-term guarantee insurance and direct loan programs. The SBA generally works with small businesses, while Ex-Im Bank involves itself with Fortune 500 companies and larger.

The SBA defines a small business as one that is independently-owned and operated and not dominant in its field. A small business must also meet the employment or sales standards developed by the Small Business Administration based on the North American Industry Classification System (NAICS).

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Forms of Short-term Financing/Factoring

Factoring
Accounts receivable are the basis for factoring. Factoring is the discounting to the holders of accounts receivables by providing financing in the form of cash to them by a factor. Factors are organizations that specialize in the financing of specific industries that are known to them. They thus have collecting clout against buyers who are responsible for paying the account receivable(s). Factoring occurs in two forms-with recourse and without recourse. The difference lies in who takes responsibility if the buyer (debtor) does not pay. When a with recourse option is exercised, issuer of the invoice is forced to pay the factor if the debtor who is responsible for paying the account receivable (invoice) but does not pay the factor. Foreign credit insurance is often used as added protection for the issuer of the invoice. Without recourse means that the factor buys the account receivable (invoice) outright and takes full responsibility for its collection without being able to go back to the issuer of the invoice for reimbursement. Factoring is mainly used for small transactions that are available for short- term financing on a continuous basis.

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Forms of Short-term Financing/Forfaiting

Forfaiting
Forfaiting is defined as the discounting of medium–term promissory notes or drafts issued by a foreign buyer. Banks forfait larger transactions over a longer period of time. These transactions are backed by the maturing promissory notes. Banks also prefer that the drafts or promissory notes be avalized by the issuing bank, thus providing a guarantee from the avalizing bank. The benefit to the importer is the receipt of a discounted cash payment for the sale with the bank assuming responsibility for the collection of the promissory notes or drafts. Forfaiting is mainly used to finance equipment and relates to specific transactions.

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Forms of Short-term Financing/Summary

Summary
A variety of short-term financing tools are available to exporters and importers. These tools range in simplicity, cost, requirements and risk. The need for financing will depend on the parties involved in the transaction, the countries involved, the products/services being traded, the amount of the transaction, and regulations that surround the transaction. Selecting and qualifying for appropriate financing tools can make or break the transaction and the profitability achieved by the importer and exporter significantly. Do your homework as programs change; identify your options; and select the appropriate tools.

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Forms of Short-term Financing/Resources

Resources
www.fas.usda.gov/agx/exporter_assistance.asp www.sba.gov (click on “Support Your Business with a Team of Experts”) Factoring Advice, November 24th, 2008 www.exim.gov (click on “U.S. Exporters”) http://tefo.com

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Forms of Short-term Financing/Activities

Activity
Take the following financing options and group them together in similar risk groups and then rate them according to risk level starting with the highest risk for the seller moving to the lowest risk. This particular risk rating will correspond to the lowest risk for the buyer moving to the highest risk to the buyer.

Bankers acceptances Bank financing Commercial Letter of Credit Documentary collections Ex-Im Bank Export credit insurance Factoring Forfaiting Personal resources SBA Standby letters of credit Transferable letters of credit Vendors

After ranking the risk, provide the minimum requirements necessary for the seller to utilize each form of financing and their associated costs.

Answer
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Forms of Short-term Financing/Assessment

Assessment
{Having sufficient collateral on your balance sheet is the basis for most financing. Which of the following is considered collateral? -sales and inventory -inventory and accounts receivable +accounts receivable and inventor -sales and cost of sales
 * type=""}

{Factors will discount foreign accounts receivable if they meet certain requirements. Which of the following best describes without recourse? -The factor buys the invoice (account receivable) and will collect from the issuer of the invoice if the buyer does not pay. +The factor buys the invoice (account receivable) outright and takes full responsibility for the collection of the invoice. -The invoice is avalized by the buyer’s bank which guarantees the payment of the invoice to the factor. -Factors can never collect from either the buyer or the seller if the invoice is sold to the factor without recourse.
 * type=""}

{What best describes what happens when a bank accepts to pay on an accepted draft under a letter of credit even if any discrepancies exist? -The buyer’s bank accepts the documents because of discrepancies in the documents and the buyer’s refusal of the same discrepancies. +The buyer’s bank agrees to guarantee payment under a letter of credit to the seller at a future date after the buyer is given title to the goods by the release of documents (negotiable or nonnegotiable) and having received the acceptance of any discrepancies by the buyer if present. -The buyer’s bank agrees to guarantee payment against an accepted draft under a documentary collection where the buyer only has accepted responsibility to pay the draft presented at maturity. -The buyer agrees to payment to the seller at a future date after the buyer is given title to the goods by the release of documents (negotiable or nonnegotiable) and has accepted the terms to pay at maturity by signing the draft presented.
 * type=""}

{Which of the following best describes the parties and the transaction activity in a transferable letter of credit? -Only the broker relying on the credit of the buyer in the form of a letter of credit to guarantee payment to the broker if documents are presented in strict compliance with the letter of credit and the seller presents his documents to the broker under a documentary collection. -Documents are presented under a letter of credit between the buyer and the seller where the broker in the transaction accepts an assignment of proceeds in order to claim his or her commission. -Documents presented under a letter of credit with a time draft are accepted for payment by the buyer’s bank after all discrepancies in the documents are accepted by the buyer. +The buyer and the seller have a middle man (broker) who relies on the credit facility of the buyer in the form of a transferable letter of credit and transfers it to the seller, who being a party to the original letter of credit, is guaranteed payment provided there is strict compliance with the letter of credit.
 * type=""}

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Medium- and Long-term Financing/Ex-Im Bank Programs

Ex-Im Bank Programs
Medium- and long-term financing options are the most limited of all of the financing options available. There are many public sector providers, but most rely on the guarantees of the Ex-Im Bank in the United States. The main difference is pricing and the risk level these public sector providers are willing to take as opposed to regular or non-export related bank financing. The definition of medium-term financing can vary by global market. Medium-term and long-term financing are used to finance capital goods and services that have a useful life beyond one year. This type of financing is often used for large transactions involving goods and services from heavy machinery to nuclear power plants. The philosophy behind this type of financing is to benefit the exporter by providing financing options for a buyer. The buyer taking advantage of this option would do so because the transaction cannot be financed in the local market. Having this option available allows the buyer to get an installment loan or lease while the seller receives immediate cash to complete the sale. The risk is with the buyer if his/her company is unable to perform against the loan or lease. The Ex-Im Bank guarantees give comfort to the lender, whether it is a bank or private provider of the financing.

Buyer Credits
Buyer credits provide financing to an importer in the form of a loan where the proceeds from the loan go to pay the seller for the goods or services. This type of financing can be done in the form of a direct loan. Direct loans usually support large capital goods purchases including plant and equipment or turnkey projects. Buyer credits are generally on a non-recourse basis with the exporter depends upon the credit-worthiness of the buyer and the support of an Ex-Im Bank guarantee. Buyer credit programs benefit all the parties involved.

The exporter is paid in cash on delivery and acceptance of the product or service. The importer benefits by acquiring funding under favorable conditions that would normally not be available. The financing entity has the firm guarantee from Ex-Im Bank that there will be full payment to the financer should the buyer default. The Ex-Im Bank program benefits the lender because the program can be used for a one-time sale or for a series of shipments from one or more exporters to the same buyer with no first-loss deductible. The program provides coverage of 90% for private sector buyers, 100% for sovereign obligors, and 98% on bulk agricultural products. Financing under these policies can generally extend up to five years (up to seven years in exceptional cases) and for any amount. The program requires a 15% cash deposit from a buyer, and the seller must meet the normal content requirements.

Ex-Im Bank’s Loan Guarantee Program
Ex-Im Bank provides competitive financing for international buyers and assists an exporter by making available a sale that would not be possible without the program. The buyer must be credit-worthy and can be from either the private or public sector. The guarantee is extended to cover purchases of US goods and services. The buyer can obtain competitive financing when financing is otherwise not available for longer terms.

The benefits enable foreign buyers to get competitive term financing from a US source that would not be available from a local source in their country. The guarantee covers 100% of commercial and political risks. There are several financing options and repayment terms. The major factor that benefits both a buyer and the seller is that there are no transaction size limits and both medium-term and long-term financing are available.

The credit standards required to qualify can vary depending on the size of the transaction. A buyer must meet these standards in order to qualify, but the use of guarantors or other credit enhancements can be used in order to qualify.

Eligibility requirements involve more than just the credit quality of the buyer. Financing is available for refurbished equipment, software, certain local costs, banking and legal fees. Military or defense items are generally not eligible nor are sales to military buyers (with certain exceptions). There are limitations on foreign content that must be evaluated against each project. The goods must be shipped from the United States to an international buyer that is covered under Ex-Im Bank’s country limitation schedule. Prior to approval Ex-Im Bank will evaluate the economic and environmental impact of the project.

Ex-Im Bank’s Finance Lease Guarantee Program
Ex-Im Bank supports competitive medium-term financing structured as finance leases under similar conditions as the loan guarantee programs. Only finance leases as defined by the International Accounting Standards qualify. Finance leases are defined as the substantial transfer of all risks and benefits of ownership to the lessee with full amortization and no residual value at the end of the lease.

Ex-Im Bank’s Direct Loan Program
Ex-Im Bank assists exporters by providing fixed-rate loans to creditworthy international buyers under similar conditions as the loan guarantee programs.

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Medium- and Long-term Financing/Other Medium- and Long-Term Financing Programs

Line of Credit Allocations
International banks with overseas subsidiaries may finance a subsidiary of a multinational company by utilizing the credit facility of the parent company as collateral for the foreign subsidiary. The international bank will transfer an exposure limit to its foreign subsidiary in order to accommodate the credit facility. This process is difficult and assumes the bank of the parent company has a subsidiary branch in the country where the financing is required.

Forfaiting
Forfaiting is defined as the discounting of medium-term promissory notes or drafts issued by a foreign buyer. Banks forfait larger transactions over a longer period of time backed by maturing promissory notes. Banks also prefer that the drafts or promissory notes be avalized by the issuing bank, thus providing a guarantee from the avalizing bank. The benefit to the importer is the receipt of a discounted cash payment for the sale with the bank assuming responsibility for the collection of the promissory notes or drafts. Forfaiting is mainly used to finance equipment and relates to specific transactions.

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Medium- and Long-term Financing/Multilateral Organizations

Multilateral Organizations
Multilateralism is a term defined by Webster’s Collegiate Dictionary (11th edition) as “involving or participated in by more than two nations or parties (such as agreements).” Most international organizations, such as the United Nations and the World Trade Organization, are multilateral in nature.

Multilateral Development Banks
Multilateral development banks were established to stimulate and foster international economic activity by financing strategic projects around the world. Some examples include:
 * the World Bank
 * the Inter-American Development Bank
 * the Asian Development Bank
 * the Caribbean Development Bank
 * the African Development Bank
 * the European Bank for Reconstruction and Development

All have a specific regional focus with the exception of the World Bank. The banks operate with funds contributed by the member countries and distribute the funds for specific developmental projects. Each year project priorities and funding programs are established by the banks. Once established, companies and/or other government agencies are encouraged to submit proposals for funding.

United Nations Development Program
The United Nations Development Program (UNDP) is affiliated with the United Nations (UN) to provide multilateral development. One hundred thirty countries are contributors to the program which provides a network of specialized international agencies that give technical assistance and financing support to underdeveloped countries. A developing country will review offers or bids from companies interested in providing the services needed and award contracts accordingly with funding the UNDP. The suppliers must keep in close contact with the UNDP and its affiliated executing agencies in order to know what contracts are coming up for bid.

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Medium- and Long-term Financing/Summary

Summary
Remember that financing organizations change their programs regularly. As an international manager, you should be aware of the organizations that offer medium- and long-term financing. Most importantly, you must know how to contact them to identify their current programs. Knowing that this type of financing is available for international transactions will allow you to negotiate from a strong position and encourage the companies involved to engage in international transactions.

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Medium- and Long-term Financing/Resources

Resources
Export Import Bank of the United States - www.exim.gov (click on U.S. Exporters) FITT Skills International Trade Finance Participants Manual, Forum for International Trade Training (FITT) The Global Entrepreneur, James Foley, 2nd Edition, Jamric Press, 2004.

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Medium- and Long-term Financing/Activities

Activity
This activity can be done as an individual or as a small group assignment. The individuals can then present their findings to the class as a whole. Open the country limitation schedule for Ex-Im Bank (www.exim.gov). Use the schedule to begin your analysis for the following situations.

1. Select three countries where financing coverage is not provided by Ex-Im Bank. Review the notes and the definition of terms at the end of the schedule and discuss the notes for the countries you have selected. Having evaluated Ex-Im Bank’s reasons for not providing coverage, select one of the three countries and evaluate the political and economic associations with the United States.

2. Select three countries that provide complete coverage with some conditional notes under Ex-Im Bank. Review the notes and the definition of terms at the end of the schedule and discuss the notes for the countries you have selected. Having evaluated Ex-Im Bank’s reasons for providing coverage, select one of the countries and evaluate the conditions from economic and political view points that would make the program attractive to a foreign buyer over financing options available in the country.

3. Select three countries that have open coverage without any note conditions by Ex-Im Bank and evaluate the political and economic differences of all three countries to the United States. Your analysis should include whether Ex-Im Bank’s programs are more attractive to the buyer than financing available in the respective countries.

4. Select three countries that have partial coverage in either the public or private sectors. Review the notes and the definition of terms at the end of the schedule and discuss the notes for the countries you have selected. Having evaluated Ex-Im Bank’s reasons for providing partial coverage, select one country and discuss the political and economic conditions that support Ex-Im Bank’s decision to provide partial coverage.

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Medium- and Long-term Financing/Assessment

Assessment
{Which of the following best explains what happens when medium- and long-term financing is provided through an Ex-Im Bank guarantee to a US exporter? -Unable to get attractive financing terms in his country that would allow the purchase of the US exporter’s product, the foreign buyer seeks financing assistance from the US exporter. The US exporter provides this financing through his bank with an Ex-Im Bank guarantee. The importer gets term financing, and the exporter is paid in installments over the term of the financing. -Unable to get attractive financing terms in his country that would allow the purchase of the US exporter’s product, the foreign buyer seeks financing assistance from the US exporter. The US exporter provides this financing directly with an Ex-Im Bank guarantee. The importer gets term financing, and the exporter is paid in installments over the term of the financing. +Unable to get attractive financing terms in his country that would allow the purchase of the US exporter’s product, the foreign buyer seeks financing assistance from the US exporter. The US exporter provides this financing through his bank with an Ex-Im Bank guarantee. The importer gets term financing, and the exporter is paid in full at the time of the sale. -Unable to get attractive financing terms in his country that would allow the purchase of the US exporter’s product, the foreign buyer seeks financing assistance from the US exporter. The US exporter provides this financing through a foreign bank in the country of the buyer with an Ex-Im Bank guarantee. The importer gets term financing, and the exporter is paid in full at the time of the sale.
 * type=""}

{Which of the following product groups would be considered for medium- and long-term financing through an Ex-Im Bank guarantee to a US exporter? -small manufactured goods, 3 to 6 months inventory supply and accounts receivable +large industrial equipment, the construction of a dam, a jet plane and long-term service contracts -toys, clothing, household consumer goods and vegetables -pre-shipment inventory and post-shipment accounts receivable.
 * type=""}

{Which of the following best describes how to qualify for Ex-Im Bank medium- and long-term financing? +revenue life of the product, dollar value of the items being imported, credit-worthiness of the buyer and country credit risk -the short-term life and dollar value of the items being imported without consideration of the buyer’s credit because it is supported by a blanket insurance policy -the buyer through local banks’ guarantee of credit-worthiness is financed through the Ex-Im bank directly -the credit-worthiness of the buyer and the country risk is automatically assumed by the coverage in Ex-Im Bank’s country limitation schedule..
 * type=""}

{Ex-Im Bank provides medium- and long-term financing -to the buyer under more favorable terms than would be available in the home country. -that would support and increase imports into the US that would not normally be possible. -Alternative financing options that provide a guarantee of payment in case the buyer defaults on installment payments. +that would support and increase export sales that would not normally be possible
 * type=""}

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Lunar Boom Town/Communications Services

Applicable Information Resources

 * http://www.aem.umn.edu/teaching/design/spring2007/Lunar.html

title: Lunar Boom Town/Communications Services


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User talk:Xmech

Welcome
Hello Xmech, and welcome to Wikiversity! If you need help, feel free to visit my talk page, or contact us and ask questions. After you leave a comment on a talk page, remember to sign and date; for it helps everyone follow the threads of the discussion. The signature icon in the edit window makes it simple. To get started, you may
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And don't forget to explore Wikiversity with the links to your left. Be bold, and see you around Wikiversity! Erkan Yilmaz ( my talk page, wiki blog ) 22:45, 25 September 2007 (UTC)

PS: Also have a look here please.

title: User talk:Xmech


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User:Erkan Yilmaz/observations

'''This is an "open blog" - since 2007. Feel free to add your own comments. Please sign anything you add...'''

title: User:Erkan Yilmaz/observations


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Filmmaking Basics/3D Storyboard/FrameForge:Getting Started

{| cellspacing="0" cellpadding="0" style="margin:0em 0em 1em 0em; width:100%" Getting started with FrameForge 3D Studio
 * style="width:100%; vertical-align:top; border:1px solid Sienna; background-color:Cornsilk;" |

Ways to use FrameForge 3D Studio

 * Two separate uses
 * The program has two different uses:

 * A. Rough planning
 * When you first start out, do not build any set. Instead, just drag actors to the empty movie set and begin taking shots.
 * Do not worry about facial expression or poses.

 * B. Final instructions to the crew
 * When you know exactly what you want, I recommend that you start over:

 * Create the entire movie set (or download it).
 * Populate the set with actors
 * Properly cloth and pose each actor
 * Take each shot
 * Go back and refine each shot, adjust the hands and head, and creating a begginning and ending shot for each dolly move.

The most important feature of FrameForge 3D Studio

 * Freeze Time
 * The most important thing to remember about using FrameForge 3D Studio is when you take a picture (store a shot), you actually SAVE everything about that shot.

 * Therefore, when you go to the Storyboard Shot Manager, click on the picture you are interested in, and select EDIT ON SET, everything will be restored exactly as it was when you took that shot.

Always work in two stages

 * Quickly rough out and then polish later.
 * That means you can quickly rough out the shots that you want.

 * Then you can go back and polish the shots.

 * Remember: Replacing existing shots is very tricky. It is very logical once you know how but learning how is very confusing at first.  The controls work like a tape recorders controls or a highly mechanical slide projector.

Understand the windows

 * Three windows in two
 * (1 & 2) The main window allows you to view from above and view through the different cameras. Both work very differently.  Don't get confused which to use when.

 * (3) The Storyboard Shot Manager is your main work page. It seems secondary but actually, it is where you do most of your planning.  Therefore, this window is much more important than it seems.

 * }

{| cellspacing="0" cellpadding="0" style="margin:0em 0em 1em 0em; width:100%" You need to record the dialog next.
 * colspan="2" style="width:100%; vertical-align:top; border:1px solid Sienna; background-color:Cornsilk;" |

The next page

 * Before I explain a way to create the movie set in FrameForge 3D Studio, you need to practice creating a few shots. Just for the fun of it, lets create shots with horses instead of people.

 * Go to the Exercise for creating two simple shots in FrameForge 3D Studio.

 * }