Companies cannot ignore the fact that there is a whole world out there to sell to, and despite thct that current global economic conditions do not favor U.S. exports, there are tremendous opportunities for companies that can and have figured out how to sell to foreign markets on favorable terms. Global commerce is more than a trend – it is a certainty, and because export sales require the support of the credit operation, CMA will continue to include international credit in all education and training programs.
In an effort to determine how far CMA should go to support international credit sales, I have recently attended events that focused on the broader topic of exporting and events that addressed specific credit issues related to international sales. Here are a few things I’ve learned so far.
Most emerging markets are outside the U.S. Middle class growth and urbanization is taking place in China, India, and throughout Asia, not in the U.S. It is estimated that the global middle class will triple in size to 4.9 billion people by 2050, and they will spend an estimated $56 trillion by 2030. Two-thirds of that spending will come from emerging markets. This will create not only a huge opportunity for growth, but may put a demand on U.S. companies to sell into emerging markets just to stay competitive and not get left behind.
A surprising number of exporters are small and medium-sized enterprises (just like most of our members), and new free-trade agreements, like the Trans-Pacific Partnership (TTP), are giving SMEs greater access to emerging markets.
There are a surprising number of Federal and State agencies that provide free and low-cost assistance for exporters. U.S. Department of Commerce Commercial Services, Small Business Administration, Small Business Development Centers, Export Assistance Centers, the newly reauthorized EXIM Bank, and a vast network of partner programs are there to help your company export. The challenge is that there is overlap among these agencies and the overwhelming number of resources can be difficult to navigate. CMA has established strategic partnerships with the International Trade Administration (U.S. DOC), the SBA in Glendale, CA, and the EXIM Bank to better understand how to bring these resources to our members that currently export or plan to in the near future.
Due to the cost of Letters of Credit to foreign buyers, more international sales are shifting to open credit terms, which decreases barriers to sales but increases the risk. At CMA’s upcoming CreditScape Spring Summit and Annual Meeting, a panel of seasoned international credit managers will discuss why overseas customers are demanding more credit in 2016, tools for evaluating the creditworthiness of foreign companies, when to (or not to) extend higher credit limits or longer terms, what are the real risks today of giving payment terms abroad, and companywide credit strategies for growing international sales.
If your company already sells outside the U.S. and your credit department already has a solid process in place for managing trade risk, then much if not all of what I’ve said is not news to you. However, my guess is that many of you have little to no experience exporting, and chances are that if your company produces a product that is marketable to other countries, you will be asked to provide support for international sales. The question is, how can CMA help you find the knowledge, information, services, and professional training to ensure you are ready to take on the challenges of global commerce? As we continue to explore trends in international sales, let us know how CMA can offer assistance to your company to help you win in the global marketplace.