Boosting Export Sales using Export Financing solutions

1. Boosting Export Sales using Export Financing solutions Florida Export Finance Corporation November 7, 2011 Prepared for the Greater Caribbean American Chamber of Commerce The Latin Chamber of Commerce of Broward County The Florida House of Representatives

2. Export? Why should we export? Do we have to be Einstein to figure it out?

3. Export? Why should we export? Because our company can have more revenue ! Because we can hedge against a diminished domestic market Because we are in Florida, and have a geographic strategic advantage Help America by exporting USA and Florida have key strategic organizations that will assist us in our exporting efforts

4. The role of the FEFC Advisor? Consultant? Friend?

5. My best definition…

6. Truths and myths about exporting myths TRuths • It is very difficult • We need to speak foreign languages • I will not get paid • I need to travel to dangerous places • I need a lot of capital to do it • It is simple if we apply common sense • We need English • We will get paid or collect credit insurance • No travel should be done where the State Department has issued a recommendation • Traded finance assistance from the federal and State governments is available

7. The Secrets of exporting

8. The Secrets of exporting 1) Take a step at the time ( start with baby steps) 2) Use credit insurance or safe collection methods ( letters of credit, cash advances) 3) Have positive cash flow 4) Use somebody else’s money to finance exports 5) Use the government fine state and federal programs

9. Trade Finance

10. 1) Take a step at a time Identify products and potential market Approach a coach….basically YOU!!!! Set up a marketing strategy Set up an appropriate financial “engine” Review the exporters “Checklist” Prepare measures for each item of the checklist if applicable Promote that exporters share their experiences

11. Exporters Checklist • Quotes, biddings • Product Specifications • Product / Country Norm compliances • Price • Delivery ( time, mode, packaging, etc) • Competition • Terms • Domestic versus international policies • #@!!!XX##&@@%!XZ • Finance and cash flow • Marketing, trade shows

12. 2) Use Credit insurance Open account transactions Cash advance transactions Letters of Credit Concept of Added value Eximbank Insurance Private Insurance Political Risk insurance

13. Credit Insurance USE A CREDIT INSURANCE BROKER • Exim Bank • Private • One customer • Many customers • Credit limit • Delegated authority • Due diligence • Deductible • Psst…pass along to the cost to the importer!!!

14. What is the fine line difference in an exporter between boosting and busting?

15. This is Busting…

16. CHRONIC LACK OF CASH!!!!

17. And this is boosting sales!

18. What is cash? Are receivables invoices cash? How about a loan to be given to us next Monday? Is inventory cash? Gold below our mattress ? Prepaid expense is it cash?

19. Cash is cash!!!!

20. Have you felt the symptoms of negative cash flow ( read lack of cash)? Lack of sleep Constant sweating Delays in delivering products Collectors demanding payment Past due invoices Worried employees

21. Actions to be taken when feeling the effects of negative cash flow Take sleeping pills… Borrow more money from Bank Have your vendors increase their credit to you, collect more from customers Take payroll of employees and gamble it a the Hard Rock? Look for investors or at worst loan sharks And….Also…

22. Break your piggy bank and gamble your family’s secure position…

23. Or Maybe call your friends at FEFC

24. Company’s with positive cash Flow… PAY DIVIDENDS, salary increases and bonuses too!

25. 4) How to Use somebody else’s money to Finance Exports Marketing and Sales effort Export financing credit facilities Working capital facility ( WCG, FEFC) Inventory financing Credit to Buyers ( large companies) Credit short term, medium and long term Invoice discount facilities Purchase order is the trigger for positive cash flow exporting

26. Pre export and Post Export Financing Pre export = more Inventory Post export = more accounts receivable

27. How it works… Foreign Invoice + Insurance= collateral Inventory + Guarantee = collateral Collateral transforms to a loan to exporter When importer pays, extinguishes the loan And renews credit line One year cycles

28. What is the best strategy for my company’s specific needs Pre Export Financing Post Export Financing Combination of Pre and Post Export Foreign Investment Financing Any aspect of Foreign export Related Business TRADE FINANCE

29. Worked out example • Export $ 100,000 cost $70,000, 150 days credit • Draw (borrow) $ 70,000 from FEFC’s guarantee line-POSITIVE CASH FLOW from financing • Invoice $ 107,000 ( assume financial expenses 5%, 2% set up fee + 1%/month)) • Bank releases 90% of invoice ( 0.9x107k) • 96,600 and pays for the $70,000 so now $26,600 POSITIVE CASH FLOW from operations When customer pays bank : $107,000 less advance and financing costs ($ 96,600) exporter pays invoice discount facility and receives $10,400 POSITIVE CASH FLOW from operations

30. Services of FEFC City State partner of Exim-Bank EDN loan and PRI originator OPIC Assist in getting into a federal or State program ( USDA, SBA etc) Financial Advisor Private Insurance Forfaiting Other sources of funds Assistance in getting you a bank interested in International Business ,

31. Florida Export Finance Corporation • Not for Profit • Created By State Legislature • Quasi-government institution • Self sustaining • 1.8 Billion in export assistance in 14 years ( 120MM/yr) • Unique structure • Private information of customers • Over 2,200 companies have received our assistance

32. How we provide assistance FREE SERVICE FEE SERVICE ( small application fee and a success fee)

33. How we provide assistance • Free advice on demand 24/7 • Fee Service. Application • $250.00 check ( in Case of Eximbank also $ 100.00 fee for letter of interest) • Pre export guarantee ( 3% year up to $ 500,000) • Medium or long term loan ( $ 2,500/$5,000 + ½% success fee) • OPIC loan or guarantee ( same policy as Medium term loan • Sales techniques and theater $ 600.00/one day • Other types of specialized consulting (donation)

34. What happens after you talk to FEFC You will never think back the same Strong medicine against negative cash flow disease Become an export skipper Meet nice bankers, Use somebody else’s money to finance growth of your turn over ( it will have some financial costs ,of course) More competitive Pay your bills in time Deliver your customers in Time You will make more money And the most important…

35. Companies with positive cash flow… Pay dividends…

36. How to reach FEFC Roberto Rivera Vice President 10400 NW 33 St. suite 200 , Miami, FL 33172 (305) 786-845-0400 (305) 786-845-0404 E: Mail roberto.fefc@gate.net WWW.fefc/biz

37. We will teach you to become a trade Finance Skipper… That will steer your company out of trouble and lead it to ultimate success!!!

38. THANK YOU!!!! Please call us, we are always at your service!