How Smart Financial StrategiesCan Help Secure Payment

International Business NewsAugust 2017

In this issue: International Payment Strategies & Tips Country Profile: Spain

Country Profile:

Spain

International Freight Forwarder & Customs Broker

J. R. (Jochen Rathert)has been with Held & Assoc., Inc. for almost 13 years and has worked in the international transportation industry for over 33 years. He has specialized in moving over-sized and over-weight cargo. His expertise is now available to you at HELD.

Tel: 816-842-6701 ext. 206Email: jr@held-assoc.com

We like the oversized cargo.We like to move it, move it!How do you move a shipment that is longer than 40’, is wider than 90”, taller than 102”, weighs over 45,000 lbs and it won’t fit in a steamship line container?Call the experts that have the experience, know the market, specialized haulers and ocean carriers able to move freight with those mentioned or larger dimensions/weight to your overseas destination. HELD often co-operates with their overseas forwarding Agents and Customs House Brokers to get your freight cleared and delivered.

To ship Over Dimension, Breakbulk and RORO cargo, call Held & Assoc., Inc. 816-842-6701

Held ocean and air shipping services include:• Full container/less than container shipments• Customs Broker• Export packing/crating, ISPM-15 Certified• Project handling and consolidations• Containerization services• Customs Bonded Container Freight Station• Worldwide network of affiliated agents• Export documentation, L/C presentation, sight draft and consular work• All risk marine and international cargo insurance and claims assistance• Letter of Credit Consultation, Presentations, Draft Collections• Consular Work, Legalizations, Certifications

Check out our helpful International tools and links on our website at www.held-assoc.com

Held & Associates, Inc., 1120 Erie Street, P.O. Box 34470, North Kansas City, Missouri 64116-0870

www.held-assoc.com

2 Held & Associates

3 Publisher’s Letter

4-5 AirFixture – Financial Strategies

6 AirFixture cont’d, Marks Nelson

7 7 Tips

8 7 Tips cont’d, Commerce Bank

9 Country Profile – Spain

10 Spain continued

11 Spain cont’d, Transimpex, About IBNews

12 M3 Insurance

Cover image: How Smart Financial Strategies Can Help Secure Payment Beginning on Pg. 4

IBNewsmag TM: cover image

IBNewsmagTel 816.616.7779 Fax: 816.472.0959fbaehner@intermark3.com

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ADVISORY BOARD:James Malouff, Doris Ganser, Paul Mastilak

As Laurel Delaney so aptly states in her Tips on Getting Paid, “The best payment deal is the one that makes the international sale happen.”

This is the focus of our August edition of IBNewsmag – making sure that you structure your financial strategies around the importance of getting that sale and getting paid.

To that end, we visited with AirFixture of Kansas City, KS beginning on Pg. 4. They employ a team that includes their bank, the Export-Import Bank of the US, an Ex-Im broker and the Small Business Administration (SBA), to ensure buyer credit, provide for working capital and ultimately to get paid.

Granted, there are many moving parts in the process, but as many small to medium-sized exporters (SMEs) can attest, it is the only way to thrive in the export process.

Speaking of export sales, with many countries experiencing solid economic growth and the value of the dollar down against most foreign currencies, now is the time to accelerate or begin your export sales program.

According to the 24 August edition of The Wall Street Journal, its front page feature article by Josh Zumbrun, “Growth Takes Off Around The World”, points out that lingering low-interest rates and the gradually receding financial crises of countries such as Greece and Brazil and 43 other countries are on track to grow this year, with some 33 of them ready to accelerate growth year on.

This coupled with the continued financial growth and productivity of US manufacturers, appears to converge on a crucial turning point for SMEs.

Publisher’s letter

International Business News

page 3August 2017

AirFixture of Kansas City, KS, exports its air conditioning distribution products to many countries – especially where financial supports are in place for getting paid.

“We rely on our ability to engineer and manufacture a new generation of products,” explained Bill Scott, V.P of Finances. “And, we tend to export to countries such as Brazil, India, Egypt, S Korea, UAE and others - hot places where AirFixture finds buyers in need – and we want to be sure we will get paid.”

Mr. Scott pointed out that its products include a wide variety of Underfloor Air Distribution (UFAD) systems for commercial buildings, in addition to intellectual property management related to these

technologies. The company has installed systems in more than 25 countries across the world and designs/develops the components and accessories needed while providing the engineering services to install in varying interior spaces.

He pointed to its R&D, which continually develops systems that are environmentally friendly than technologies of former years, and planned to meet changing worldwide standards.

LEED = Leadership in Energy and Environmental DesignLEED is an internationally recognized green building certification system. This process offers third-party verification that a building or community was designed and built using strategies aimed at reducing energy and water usage, promoting better indoor air quality, and improving quality of life.

How AirFixture of Kansas Finances Export Sales and Ensures Payment

Bill Scott reviews AirFixture’s financials

IBNewsmagTM

August 2017page 4

won’t allow to be utilized as collateral.

Most lenders will not lend against a foreign contract or account receivable, said Mr. Cresswell. “This is where our Export Working Capital Program comes in with a 90% guaranty to the lender. In essence we are an insurance policy for the lender reducing their risk to just 10% of the loan. With this guaranty the lender will then allow the company to use these assets as collateral for a working capital line of credit.”

Mr. Cresswell went on to explain, “Additionally, the EXIM credit insurance program offers the exporter 95% coverage on any loss they could take. Pairing the programs together insulates all parties from

“We started the company in Kansas City, Missouri in 2001,” explained Mr. Scott, “and then moved our facilities to Kansas City, Kansas in 2005.”

For the most part, AirFixture utilizes a network of worldwide distributors, and provides the technical support needed to complete and follow through with the export sale.

Because the sales cycle can range anywhere between 6 months to several years, the company relies on proactive strategies and financial organizations to ensure timely payments.

“While the traditional Letter of Credit (L/C) has worked in the past, they tend to be complicated and somewhat risky in uncertain circumstances,” according to AirFixture Managing Director, Mike McQueeny.

Foremost among them is the U.S. Export-Import Bank. (EXIM) which guarantees the companies receivables through its Export Credit Insurance products. These accomplish two key functions - reduce non-payment, and extend competitive credit terms to buyers, usually at a lower rate than their countries’ own banks. Both are important for small manufacturers.

“We employ both Small Business Administration (SBA) -offered small business loan capital lines of credit and EXIM credit insurance to work through the sales and receivables functions,” said Mr. McQueeny

SBA-guaranteed small business loans enable the company to operate financially during the sales cycles, and EXIM enables foreign buyers to import AirFixture systems. The company works through a Milwaukee-based broker to access EXIM products.

Larry Cresswell, SBA Regional Export Finance Manager who covers several Heartland states and works with AirFixture said, “At issue is as a company such as AirFixture begins selling internationally they develop assets their lender

Mike McQueeny discusses product development with an industrial designer.

AirFixture continued on p. 6

International Business News

page 5August 2017

Going Global? Tax, legislative and regulatory developments within the U.S. and in the international marketplace can make it a challenge. Our international tax group will help you develop a strategic plan to help you navigate your international journey.

(The Journey Begins Here)

From Big Ideas to Bigger Thinking

risk and allows US companies the working capital they need to compete globally.”

Returning to the role of EXIM, “I realize there is much misinformation about the role and functionality of EXIM,” said Mr. McQueeny, “but for small manufacturers like ours it plays a key role in our export abilities.”

He went on to point out that although the greatest EXIM Bank dollars are made available to the large corporations, like Boeing, 98% of its transactions are made on behalf of small to medium-sized exporters (SMEs) like ours.

“I have testified in congressional hearings about the importance of the EXIM Bank to SMEs,” Mr. McQueeny said. “And in addition to EXIM surpluses reducing our national debt, the EXIM service fees paid by the largest US corporations actually subsidize our SMEs enabling us to successfully export.” These are the life-blood of small company export sales.”

AirFixture systems are premium-priced with high standards of quality. “We proudly state that AirFixture systems are ‘Made in the USA’,” said Mr. Scott.

For more information, see www.airfixture.com

Illustration depicting the Underfloor Air Distribution (UFAD).

AirFixture continued from p. 5

IBNewsmagTM

August 2017page 6

7 Practical Tips to Get Paid on International DealsBy Laurel Delaney

Collecting money from your overseas customers doesn’t have to be painful. The first rule of thumb: Never sell on open account

— no ands, ifs or buts! Got it? Open account means you ship goods or sell services without any guarantee of collecting payment on a transaction. Here are seven ways to get paid on international deals.

1. Payment in AdvanceThis is obviously the best of all payment methods since you can forestall possible collection problems and you have immediate use of the money. I use the advance payment method when I know absolutely nothing about the customer, when speed of handling will make or break the sale, and when the transaction is less than US $5,000. It’s very hard to get cash in advance for anything, yet on the other hand, you won’t get what you don’t ask for. There is a remote chance it can happen. The hungrier your customer is for your product or service, the more likely it is that they’re going to do it.

2. Payment OnlineSecond to cash in advance is payment collected online, provided the transaction is small (processing fees can take a

Laurel Delaney, FounderGlobeTrade.com

big bite out of your profits) and you wait to release goods or your service offering until after you clear funds in your bank account. A well-known option that a lot of small business owners start with is PayPal. With PayPal worldwide, you can send and receive money in 25 currencies from anyone with an e-mail address in more than 200 countries and regions, allowing you to accelerate the pace of online transactions across borders. Two other companies to watch in this space are: ClearXchange (soon to be Zelle) and Apple Pay.

3. Sight DraftA sight draft allows you to draw a check on your buyer’s bank account, although the actual mechanics are a little bit more complicated than that. With a site draft, your international customer won’t be able to take possession of the shipment until they sign a document saying the shipment has been made. When they do, their bank will pay you. By definition, sight drafts are supposed to be paid immediately, but they often take a day or two to be processed (not unlike checks).

4. Letters of Credit — Security with Flexibility Securing payment with a letter of credit is a longstanding option. To summarize the process: Once you and your customer agree on payment by letter of credit, it is the

customer’s responsibility to take your proforma (an invoice that reflects all estimated costs involved to move product door to door) to her bank and open the L/C (letter of credit) in your favor. Once the opening bank has all the appropriate information from the customer, it advises you, the seller, that the L/C has been opened. Oftentimes this will be done by e-mail to the paying bank. Your bank then forwards that information to you. The letter of credit is final and subject to correction only for errors in transmission. Reach out and work hand-in-hand with your banker to get help.

5. Credit CardsMost U.S. companies offer credit card payment options online because they offer the capability to conduct business throughout the world. Among the credit cards are American Express, VISA, Mastercard, and Discover. Watch the service fees on the total transaction price. They can add up. The greater the global reach for a card, the easier it will be on you for collecting payments.

6. Noteworthy Exporter Noncash Payment ConsiderationsYou may consider noncash payment methods to finance an export deal when other means are unavailable. Look into countertrade, bartering (a type of countertrade), and consignment. Conduct an

page 7August 2017

online search for assistance on the pros and cons to each of these exchanges.

7. Work With Your Banker for Other Creative Options, Including Export Financing AssistanceWork closely with your banker to guarantee a form of payment that minimizes risks, ensures you get paid, and satisfies both parties in the transaction. For example, they might recommend Export Credit Insurance (https://www.exim.gov/what-we-do/sell-to-foreign-customers-on-credit-terms) that protects your business’ accounts receivable against both commercial and political risks that are beyond your control. It’s a policy that pays you even when your customers don’t.

“The best payment deal is the one that makes the international sale happen,”

said Ms. Delaney.

Laurel Delaney is the founder of GlobeTrade.com (http://www.globetrade.com), Creator of the Global Small Business Blog, Director of the 3rd Annual Global Small Business Forum 10/20/17 in Chicago, President of Women Entrepreneurs GROW Global, and author of the best-selling, “Exporting: The Definitive Guide to Selling Abroad Profitably”

You can reach Laurel by email atldelaney@globetrade.com.

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816-234-2608commercebank.com

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More business means more challenges. And more ways we can help.At Commerce Bank, we know that as your company expands, new fi nancial challenges arise. That’s why we work with you to secure new equipment, streamline cash fl ow and fi nance real estate. That means you can get back to focusing on running a successful business.

T:8.75”

T:5.215”

July 2017page 8 August 2017page 8

only bosses have authority to make decisions• Many businesses are closed from 1-4 PM daily. People go home for the main meal of the day -and sometimes an afternoon siesta• Spaniards generally stand close together when they talk and may also pat you on the shoulder or arm to make a point. Don`t pull away.

Overview• Slightly more than twice the size of Oregon• Population Distribution: With the exception of Madrid, Seville and Zaragoza, the largest urban concentrations are found on the Mediterranean and Atlantic coasts. The largest cities are Madrid (capital city) and Barcelona (large seaport).• Population: 48.6 million (est. July, 2016)• Population Growth: 0.84% (2016 est.)• Government: Parliamentary constitutional monarchy• Literacy Rate: 98.1%

PROFILE:SPAIN

A Few Practical Tips for Doing Business in Spain

• If a public holiday falls on a Tuesday or Thursday, consider that many Spaniards take a four day weekend • Take time to talk to the person about his family before start talking business• Be prepared for lengthy negotiations• Be sensitive to regional differences in culture – Catalonian and Basque• In introductions, have a firm handshake and maintain eye contact• Spanish businesses are generally hierarchial so

International Business News

page 9August 2017

National Holidays• January 1 - New Year’s Day• January 6 - Epiphany• March 20 - March Equinox• Good Friday• Easter• June 21 - June Solstice• October 12 - Hispanic Day (commemorates Columbus arrival in the Americas)• November 1 - All Saints Day• December 6 - Constitutional Day• December 8 - Immaculate Conception• December 25 - Christmas Day• December 31 - New Year`s Eve Notes: There are also many regional and local holidays as well.

Economy• GDP: $1.252 Trillion (2016 est.)• GDP Growth Rate: 3.1% (2016 est.)• Unemployment Rate: 19.7% (2016 est.)• Exchange Rate: 1 US Dollar = .85 Euros (as of 18 Aug 18, 2017)• Labor Force Makeup: Services - 71.7%; Manufacturing - 24%; Agriculture -4.2%• Major Industries: Textiles and apparel (including footwear), food and beverages, metals and metal manufacturing, chemicals, shipbuilding, automobiles, machine tools, tourism, clay and refractory products, pharmaceuticals, medical equipment

International Trade• Major Exports: Motor vehicles, foodstuffs, pharmaceuticals, consumer goods• Total Exports: $266.3 billion (2016 est.)• Major Imports: Machinery and equipment, fuels, chemicals, semi-finished goods, foodstuffs, consumer goods, measuring equipment, medical equipment• Total Imports: $287.9 billion (2016 est)• Major Export Partners: France - 15.7%, Germany - 11%, Italy - 7.4%, UK - 7.4%, Portugal - 7.1%, US - 4.5% (2015) • Major Import Partners: Germany - 14.4%, France - 11.7%, China - 7.1%, Italy -6.5%, Netherlands - 5%, UK - 4.9% (2015)

Spain Business and News Websites: • ABC - www.abc.es• El Mundo - www.el-mundo.es• El Economista - www.eleconomista.es• Cinco Dias - www.cincodias.com • El Pais - www.elpais.com • El Periodico - www.elperiodico.es

IBNewsmagTM

August 2017page 10

The voice of small business international trade Now in our 13th year of continuous publishingIBNewsmag is an independent on-line magazine for smallto medium-sized enterprises/businesses (SMEs) publishedmonthly by InterMark3, Inc.

In each and every issue, and on our website – www.ibnewsmag.com - we bring you practical, proven information and current international business news to help you grow your global business.

For questions and comments, email Fred Baehner: fbaehner@intermark3.com

Sampling of Spanish Companies

• CATUAV - drones- www.catuav.com • IDAP T- mobile phone chargers- www.idaptweb.com • Inditex - world`s largest clothing retailer- www.inditex.com • Repsol S.A .- oil and gas- www.repsol.com• Gamesa - renewable energy- www.gamesacorp.com/en• Tecnicas Reunidas - engineering, procurement and construction of industrial and power plants- www.tecnicasreunidas.es • Curaxys - biopharmaceuticals- www.curaxys.com• Laboratorio Reig Jofre SA- pharmaceuticals - www.reigjofre.com• Fagor- appliances - www.fagorcommercial.com• Lacasa- confectionery products - www.lacasa.es/en • Acerinox- world`s largest stainless steel producer - www.acerinox.es• Uralita Group- construction materials - www.uralita.com • 24 symbols - E-books technology www.24symbols.com • Fon- Wi-Fi network development www.fon.com

By Paul MastilakInterMark3, Inc.

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page 11August 2017

When you assume your foreign of-fices are doing just fine with their insurance coverages, potential issues are often left unexplored—and unresolved:

• Gaps in coverage: Are your foreign offices leaving themselves exposed by going without crucial coverages?

• Redundancies in coverage: Are your foreign offices purchasing certain types of liability insurance that usually cover both domestic and foreign offices?

• Higher premiums: Are your foreign offices benefitting from economies that can come with being connected to the larger parent company’s policies and relationships?

• No reporting: Are you aware of the types of losses taking place at your foreign offices?

• The quality of the local broker: Do you know the reputation and expertise of the local brokers with which your foreign offices are working?

The Solution? A Global Master ProgramWith a global master program your foreign offices don’t give up con-trol. They still have locally based brokers who represent them and

What YouDon’t Know Can Hurt You

know the local laws, pricing, expo-sures, coverage norms, and market conditions. Additional benefits include:

Coverage gaps and overlaps are preventedThe managing broker provides the local brokers a summary of cover-ages purchased at the corporate level that extend to all entities, domestic and foreign.

Everything is tied togetherWhen it’s possible and the costs are competitive, your foreign offices should place their coverages with the same insurance company that you use so all your policies are tied together.

Cost savings are createdYour foreign offices may discover they have access to more parent company coverage than they had realized. That means when redun-dancies are eliminated, money is saved.

The big picture emerges and ev-erybody winsWith a global master program, you know your foreign coverages with certainty. On top of that, your foreign offices benefit from having better information, better pricing and better service.

By Jim Yeager, Vice President & Director of International PracticeM3 Insurance

CONTACT US TODAY TO LEARN MORE 800.272.2443 » www.m3ins.com

With advisors who focus relentlessly on understanding what you need, you have a winning advantage. M3’s playbook is about way more than our services, resources, and capabilities: It’s about how we tailor them to maximize their impact on you.

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July 2017page 12 August 2017page 12