By Ade Adesanya
The Greater Waco Chamber and the Small Business Development Center Network hosted a roundtable discussion Wednesday about how Waco-based businesses can become more active in international business expansion and local job creation.
“When you think of going international as a new company, I mean doing business with a foreign company, the bulk of your work is to help the international company overseas to secure finance,” John Peloubet, vice president and senior relationship manager at Wells Fargo Bank, said.
Introducing Waco businesses to international business expansion will improve the economy and will propel locally-based business success beyond the sluggish economy, Peloubet said.
He added that understanding international commerce laws, terms and characteristics of international financing is critical to benefiting from trading globally.
“One of the biggest problems with doing international business with small firms is the foreign exchange rate and the rules of transferring funds,” Peloubet said. “In most cases the international partner will be paying you with their local currency and currency fluctuations against the dollar can be an issue.”
Local businesses can access the world market and benefit from reduced risk while trading overseas by using local banks that will charge a fee for their services.
The experts explained how to approach emerging overseas markets.
“The big questions for businesses is to know what they can produce to be able to benefit from international business,” Lorraine McCord, director for the international trade center Small Business Development Center, said.
To de-mystify the link between policies in international economics and actually shipping goods and services, the speakers used descriptive examples.
“Before going international, let the Department of Commerce help match your company [with a trusted partner overseas],” Nicholas Renna, senior vice president and senior relationship manager at Citibank, said. “They will help you determine if there is a market for your product.”
The discussion also centered on how businesses have to be familiarized with banking institutions that “mitigate risks”— meaning reducing risks for businesses.
“As banks, what we do is provide a letter of credit, and you need the company overseas to get a letter credit from a trusted bank in their country and the letter credit reduces your risk,” Renna said.
The letter of credit means the bank agrees that the transaction can be made. The letter of credit states a customer is trustworthy. Some Waco banks can issue letters of credit if their customer wants to do business internationally. If the overseas customer defaults on payment, the overseas bank will pay the U.S. business as long as the overseas customer has a letter of credit that has been verified.
The letter of credit is a “risk shifter” from the Waco-based business to the local bank of the customer overseas, Lynne Byerly, senior vice president and manager for international trade services and letter of credit at Texas Capital Bank, said.
As a result of the letter of credit, local businesses can have double protection against nonpayment.
The discussion, which took a questions-and-answer approach, was managed by a panel of four international financing experts.
Attending the meeting were Central Texas-based business owners who currently export their finished products globally and aspiring international business owners. The panel assured the attendees that assistance is available to local businesses interested in expanding overseas.
Members of the Waco business community in attendance expressed their appreciation for the opportunities, adding that they will need help to take advantage of the possibilities. McCord said Small Business Development Center Network is available to provide assistance for free, as the program is taxpayer supported.
Clearview, a technology solutions company and First City Financial Corporation at the Greater Waco Chamber of Commerce presented the roundtable discussion.