Trade Finance Guide

OPEN ACCOUNTIntroductionMethods of Paymentin International TradeCash-in-AdvanceDocumentary CollectionsOpen AccountExport Working CapitalFinancingExport Credit InsuranceSVB’s Asset PurchaseProgram (APP)ForfaitingLetters of CreditThe Export-ImportBank Working CapitalProgramsGovernment AssistedForeign Buyer FinancingKey Points°°°The goods, along with all the necessary documents,are shipped directly to the importer who agrees topay the exporter’s invoice at a future date, usually in 30 to 90days.Exporter should be absolutely confident that the importer willaccept shipment and pay at agreed time and that the importingcountry is commercially and politically secure.Open account terms may help win customers in competitivemarkets, if used with one or more of the appropriate trade financetechniques that mitigate the risk of nonpayment.How to Offer Open Account Terms in CompetitiveMarketsOpen account terms may be offered in competitive markets withthe use of additional trade finance techniques such as ExportGovernment Guaranteed Programs, Export Insurance or Forfaiting.Export Working Capital FinancingTo extend open account terms in the global market, the exporter wholacks sufficient liquidity needs export working capital financing thatcovers the entire cash cycle from purchase of raw materials throughthe ultimate collection of the sales proceeds. Export working capitalfacilities can be provided to support export sales in the form of aloan or revolving line of credit.Government-Guaranteed Export Working CapitalProgramsThe Export-Import Bank of the United States and the U.S. SmallBusiness Administration offer programs that guarantee exportworking capital facilities to U.S. exporters. With these programs,U.S. exporters are able to obtain needed facilities from commerciallenders when financing is otherwise not available or when theirborrowing capacity needs to be increased.SVB is one of the top users of the Export-Import Bank WorkingCapital Guarantee program, and is one of only eight banks in the U.S.that enjoys a Super Delegated Authority of up to $300 million fromthe Ex-Im Bank. As of June 2009, SVB is providing 45 Ex-Im Bankguaranteedworking capital facilities totaling over $150 million andsupporting more than 3,000 U.S. small business jobs. SVB earnedEx-Im Bank’s Small Business Bank, Bank of the Year Award in2005.Trade Finance Guide 17