EESTI EKSPORDI FINANTSEERIMINE 2015 October 7, 2015 Tallinn, Estonia. Growing Export Sales through Proactive Financing Solutions

Transcription

1 EESTI EKSPORDI FINANTSEERIMINE 2015 October 7, 2015 Tallinn, Estonia Growing Export Sales through Proactive Financing Solutions

2 Today s Agenda 1.Why Export Finance? 2.Introduction to ITF & Trade Finance Budget and Planning Practical Experience First Step 3. Wholesale Finance 4.Retail Finance for Repetitive Business 5.Key Customer Financing 6.Questions & Answers (Q & A) Next Step Advanced Ask or Contact Us

3 Part 1: Why Export Finance?

4 Part 1: Why Export Finance? Two Main Simple Reasons: 1. Buyers expect to see some deferred or flexible payment options no sense making a quote if the buyer doesn t have liquidity or the means to pay 2. Suppliers need to ensure they get paid better you as the supplier control the financing mechanism than depend on the buyer

5 Part 2: Introduction to ITF and Trade Finance

6 Part 2: Introduction to ITF and Trade Finance Financing Trade and Projects Worldwide

7 Part 2: Introduction to ITF and Trade Finance 32 Countries: USA, Canada, UK, Germany, Switzerland, Russia, Poland, Ukraine, Kazakhstan, Mongolia, Peoples Republic of China, Taiwan, India, Nigeria, Ethiopia, Turkey, South Africa, Botwana, Zambia, Lesotho, Swaziland, Mozambique, Namibia, Angola, Madagascar, Ghana, Austria, Czech Republic, Romania, Bulgaria Global Presence

8 Part 2: Introduction to ITF and Trade Finance CEO s Profile Jeffrey B. Kamins CEO and Founder 20 years of experience in international trade and finance MBA, Thunderbird, American Graduate School of International Management Russian, German, Spanish speaker Worked for two NYSE-listed Fortune 500 manufacturers (AGCO Corporation and Valmont Industries) and German power company, RWE, extensively using finance to grow export sales and support trade business Official in US Department of Commerce, International Trade Administration, CIS Countries Extensive work with CIS, Africa, Latin America, Middle East, Asia Founder of ITF in 2008; 32 countries with agents; projects in over 40 countries; portfolio $950 million Working with all Export Credit Agencies, banks, private credit insurance, forfeiters, EBRD, IFC, ADB, OPIC, DEG, China Development Bank, Nordic Investment Fund, private equity

9 Part 2: Introduction to ITF and Trade Finance CEO s Profile Director, Retail and Key Account Customer Project Finance for Central and Eastern Europe (AGCO International GmbH Switzerland ( ( ). Started the company s usage of Export Credit Agency financing including: US Ex-Im Bank, Switzerland SERV, Finland Finnvera, France COFACE, Italy SACE) Developed leasing company partnerships with UniCredit, Raiffeisen, OTP, and several other specific country-specific financing institutions. Co-launched and fully managed AGCO's first retail finance programs to support endcustomers of tractors, combines, and other farm machinery produced by AGCO with company supported leasing and credit in Russia, Ukraine, Kazakhstan, Mongolia, Czech Republic, Poland, Slovakia, Romania, Bulgaria, Hungary, Georgia, and Moldova.

10 Part 2: Introduction to ITF and Trade Finance CEO s Profile Director, International Market Development Primarily developed dealership network in former Soviet Union countries Started the usage of US Ex-Im Bank financing. Developed cooperation with EBRD, IFC, Inter-American Development Bank, Millennium Challenge Corporation, African Development Bank, Asian Development Bank, and hedge funds such as Agribusiness Partners International, Ashmore, JP Morgan, etc.

11 Part 2: Introduction to ITF and Trade Finance CEO s Profile Senior Manager for CIS Country Affairs Supported the supply chain for procuring uranium (yellow cake U3O8), UF6 gas, and enriched uranium from Russia, Kazakhstan, Uzbekistan and Ukraine Support financing and risk management of uranium mining development and trading transactions

12 Part 2: Introduction to ITF and Trade Finance CEO s Profile Senior Manager for CIS Country Affairs Supported the supply chain for procuring uranium (yellow cake U3O8), UF6 gas, and enriched uranium from Russia, Kazakhstan, Uzbekistan and Ukraine Support financing and risk management of uranium mining development and trading transactions

13 Part 2: Introduction to ITF and Trade Finance About Integrated Trade Finance LLC (ITF)

14 Part 2: Introduction to ITF and Trade Finance Equipment Buyers Typical Interests and Needs: 1. Get maximum deferred payment terms to spread the cost of their capital purchase over time with the least amount of interest expense 2. Squeeze the supplier to offer help on financing and subsidize financing costs if possible. 3. Evaluate various options of financing and compare on competitive basis (looking at leasing, trade finance, classic credit, investment, etc.) 4. Improve company liquidity and save cash for operations. 5. Get financing readily easy and on-time for the ordering of equipment. 6. Understand financial programs and how to use them and what is required.

15 Part 2: Introduction to ITF and Trade Finance Current Projects: $950 million + Grain Elevators, Farm Equipment Ukraine Financing: $280 mio Wind Energy Projects Worldwide Financing: $280 mio Medical and Technical Financing Projects Latvia-USA Financing: $60 mio Feedstock and Bio-Gas Projects Financing: $220 mio Mining and Transport Equipment Mongolia Financing: $90 mio Shopping Center, Business Center Projects Worldwide Financing: $120 mio

16 Part 2: Introduction to ITF and Trade Finance OECD Countries Where Product Can be Financed From (+ People s Rep of China) Equipment Financing: OECD Standard Trade Finance Terms 15% down payment 1 year 15 year financing tenor Lowest interest rates available on the market due to government insurance Semi-annual repayment schedule (every 6 months) 6-month payment grace period after shipments or completion of project 12-month credit line usage period; down payment at each order No additional collateral pledge if financially qualified; equipment itself is pledged or has lean Credit insurance premium (flat fee) can be fully included in financed amount along with bank fees Credit insurance provided % cover on medium and long term financing (3-15 years); 90% on short-term credit (up to 1 year) Must have 85% content (US Ex-Im Bank); 51% (Canada, Germany, most European countries, etc)

17 Payment for Receivables Service Part 2: Introduction to ITF and Trade Finance Trade Finance Structures: Retail Finance to End-Customer (Buyer Credit) Supplier Supply Contract; Goods & Services Down Payment (e.g. 15%-30%) End- Customer Commission for Helping with Sale Dealer Lending Bank Insurance Policy for Credit Loan Agreement Payment of Balance (360 Days 7 Years Credit) Credit Insurer (private or Government) Credit Documents Credit Documents + Guarantee and/or Acknowledgement of Assignment

18 Assignment Agreement or Purchase Agreement Payment for Receivables Service Part 2: Introduction to ITF and Trade Finance Trade Finance Structures: Retail Finance to End-Customer (Supplier Credit) Supplier Supply Contract with Credit Terms of 360 Days 5 Years & Goods & Services Down Payment (e.g. 15%-30%) End- Customer Commission for Helping with Sale Dealer Insurance Policy for Credit Factoring Bank Payment of Balance (Assigned by Supplier) Credit Insurer (private or Government) Credit Documents Credit Documents + Guarantee and/or Acknowledgement of Assignment

19 Part 2: Introduction to ITF and Trade Finance Finance Eligibility under Trade Finance Acceptable Countries for Receiving Special International Credit with ITF Africa Nigeria Ghana Morocco Kenya Tanzania Ethiopia Botswana Tunisia Congo Zambia Mozambique Namibia Angola Malawi Ivory Coast Senegal Eurasia Ukraine Russian Federation Kazakhstan Mongolia Azerbaijan Moldova Turkey Romania Bulgaria Serbia Croatia Turkmenistan Kyrgyzstan Tajikistan Vietnam Thailand Indonesia India Latin America Industries Countries from Where Product May be Sourced on Special Financing Terms with ITF Ecuador United States Finland Fitness Center Franchising, Chile Germany Spain Peru Construction Equipment People s Republic of Turkey Argentina Mining Equipment China United Kingdom Training Uruguay Transportation Services, Equipment Equipment Mexico Brazil & Paraguay Vehicles/Trucks Canada Norway Local Colombia Cost Financing Packages for Airport Equipment South Korea Denmark Nicaragua Aircraft/Planes/Helicopters Global Markets El Salvador Instrumentation/Testing Equipment Guatemala Mexico Honduras Panama Dominican Republic Costa Rica Belize New and Used Equipment (used equipment should be no more than 3 years old or refurbished) Processing and Packaging Equipment Medical Equipment Fitness Center Equipment Consulting/Engineering Services Hydraulics and other Manufactured Components Telecommunications Equipment/Servers Power Generation Equipment Oil and Gas Exploration/Processing/Transport Equipment France Italy Sweden Austria Switzerland Belgium Australia Japan Taiwan Argentina India

20 Part 3: Wholesale Finance

21 Part 3: Wholesale Finance Dealers Need and Expect an Offer They Can t Refuse Dealers need to have extended payment terms in order to have time to stock your product, and then sell the product to the retail customer ( days usually) Intelligence: request financial statements for last three years; do your own financial evaluation on your dealer regularly; visit your dealer and check turn-over times, facility appearances, amount of product stocked, etc. Use credit insurance; get your credit insurer to know your customer and understand the business cycle and model Use global credit insurance policy; top-up credit insurance when needed by using additional insurers Forfeiting Local bank dealer stock financing; have local financing partners for key markets Request PAYMENT UPON RETAIL: your dealer should not use its credit limit from you to extend to end customer (this is what RETAIL FINANCE is for) The Godfather 1972 Paramount Pictures Alfran Productions

22 Part 4: Retail Finance Eesti Machinery 0% Down Payment Now until 30 November, 2015 For qualified buyers. In Partnership with *******BANK and TALLINN Equipment 3% Interest fixed for first 2 years Now until 31 October, 2015 For qualified buyers. In Partnership with *******BANK and

23 Part 4: Retail Finance Proactively having Ready-Solutions in Customer Export Finance = International Sales! = Investment Don t wait for your customer to tell you how they will pay; take the lead Make the payment terms something you know and are comfortable with, rather than trying to work with buyer s proposed payment plan or financial institution Give your salesforce an extension so they can sell the product or service by showing monthly payments and show economics of the purchase/cash flow rather than just price Train your sales managers how to offer financing at the POINT-OF-SALE Bring liquidity to your customer Make the process easy to get to Yes or No! Don t lose much time! Have several good financial partners ready to support you in your target markets Make the dealer part of the financing process Train your dealer on financing programs; participate in dealer financing programs Don t let your dealers use wholesale credit limits to extend to end customers; retail financing should be at least 2 year financing or the life of the equipment Create customized programs that you can market by product or by season for example Create an accrual or budget allowing you to buy down the cost of financing

24 Part 4: Retail Finance Be PROACTIVE! Don t wait for your customer to tell you how they will pay and then figure out how you will manage it; DON T GET CAUGHT BY SURPRISE! Raiders of the Lost Ark (1981) Paramount Pictures Lucasfilm

25 Part 4: Retail Finance Create Vendor Financing Program Identify your Target Country Markets where Financing will be key driver Identify local and global retail finance partners willing to support your sales in that market Have multiple partners to keep them honest and competitive Have agreements with the partners on the process, credit analysis, proposals, compensation, payment, remarketing, etc Have regular reports checking partners support: check interest rates, compensated rates; payment schedules, etc. Help partners get familiar with your equipment; bring them to trade shows; factories; meet dealers/sales managers; provide catalogues. Don t depend exclusively on finance partners to tell you about the market; do your own checking and homework Save key customer financing to be decided directly

26 Part 5: Key Customer Financing This holds true in dealing with key account customer sales. The same holds true in offering financing to those customers.

27 Part 5: Key Customer Financing Customization is Key Just like with winning the sale for a Key Account Customer, using a tool like Miller- Heiman Large Account Management Buy- Sell Hierarchy (LAMP) financing applies the same way and must be integrated into the Key Account Selling Process Every financial offer is customized May be a blend of trade finance, leasing, project finance and working capital Goal: offer UNIQUE financing to beat the competition and get the Key Account the financing needed to make their project the MOST PROFITABLE POSSIBLE Get the TOTAL CAPEX PLAN Know the financial directors Be ready to take more risk

28 Part 5: Key Customer Financing Customization is Key Go the Extra Mile/Kilometer for your client to get financing for the PROJECT, NOT JUST YOUR EQUIPMENT This may require helping your Key Account to put advanced financing together 10% Trade Finance 20% Leasing 50% 20% Working Capital Credit Equity

29 Part 5: Key Customer Financing Other Major Sources of Financing for Emerging Markets

30 Three Ways of Cooperation for Suppliers with ITF Framework Cooperation Project 1 (Annex 1) Individual Transaction Financing Retail Financing/Flo w Financing Program Wholesale Financing Program

31 My Contact Info:

32 Question and Answer Time Donald Trump President The Trump Organization Republican Party (USA) Candidate for President