Roles as Caregivers and Even an Educators
Most nurses are familiar with their roles as caregivers and even a educator. According to Millstead (2013), nurses must adopt multiple roles, including that of political activist and advocate. She went on to explain that “nurses cannot afford to limit their actions to monitoring bills; they must seize the initiative and use their considerable collective and individual influence to ensure the health, welfare, and protection of the public and health care professionals” (Millstead, 2013, pp15-16).
As a key political actor (nurse) examine an issue in your current or past work setting which you are passionate about and briefly with evidence to support it, defend your opinion to your fellow students (agenda setting)? in addition respond to your peers by taking an opposing stance even if you are for the issue. If you can defend your issue you will be able to influence others.
~Think outside of the box~ (Do not cover the affordable care act because this comes later, your textbook offers some examples)
Milstead, J. A. (2013). Health policy and politics: A nurse’s guide (4th ed.). Burlington, MA:Jones and Bartlett Learning.
Now You ARE READY FOR THE STEPS NEEDED TO COMPLETE AN import or export transaction. In Chapter 2 you learned the basics of start-up. Chapter 3 led you through the concepts of planning and negotiating a transaction. Chapter 4 explained how to compete in the Internet marketplace. This chapter covers the four remaining commonalities, which encompass paying for the goods and physically moving them from one country to another.
Finance your import/export transaction.
Pack and ship your product (physical distribution).
Supply all documentation.
Why do you need financing in the import/export business?
To start, expand, or take advantage of opportunities, all businesses need new money sooner or later. New money means money that you have not yet earned, but that can become the engine for growth.
For the importer, financing offers the ability to pay for the overseas manufacture and shipment of foreign goods destined for the domestic market. For the exporter, financing means working capital to pay for international travel and the marketing effort. New money can also be loans to foreign buyers to enable them to purchase an exporter’s goods.
If you have done the homework phase well and have purchase orders for your product(s) in hand, there is plenty of currency available-banks or factors are waiting to assist you.
Commercial banking is the primary industry that supports the financing of importing and exporting. Selection of a banking partner is an essential part of the teamwork required for international trade success. When shopping for a bank, look for the following:
A strong international department.
Speed in handling transactions. (Does the bank want to make money on your money- called the float?)
Relationship with overseas banks. (Does the bank have corresponding relationships with banks in the countries in which you wish to do business?)
HOT TIP: In the import/export industry there is a saying: “Walk on two legs.” This means choose carefully, then work closely with a good international bank and a customs broker or freight forwarder
Forms of Bank Financing
Loans for international trade fall into two categories: secured and unsecured.
Banks are not high risk takers. To reduce their exposure to loss, they often ask for collateral. Financing against collateral is called secured financing and is the most common method of raising new money. Banks will advance funds against payment obligations, shipment documents, or stor age documents. The most common method is advancement of funds against payment obligations or documentary title. In this case, the trader pledges the
goods for export or import as collateral for a loan to finance them. The bank maintains a secure position by accepting as collateral documents that convey title, such as negotiable bills of lading, warehouse receipts, or trust receipts.
How a Banker’s Acceptance Works
Another popular method of obtaining secured financing is the banker’s acceptance (B/A). This is a time draft presented to a bank by an exporter. (It differs from a trade acceptance between buyer and seller, in which a bank is not involved.) The bank stamps and signs the draft “accepted” on behalf of its client, the importer. By accepting the draft, the bank undertakes and recognizes the obligation to pay the draft at maturity, and has placed its creditworthiness between the exporter (drawer) and the importer (drawee). Banker’s acceptances are negotiable instruments that can be sold in the money market. The B/A rate is a discount rate generally 2 to 3 points below the prime rate. With the full creditworthiness of the bank behind the draft, eligible B/As attract the very best of market interest rates. There are specific criteria for eligibility.
The B/A must be created within 30 days of the shipment of the goods.
The maximum tenor is 180 days after shipment.
The B/A must be self-liquidating.
The B/A cannot be used for working capital purposes.
The credit recipient must attest to no duplication.
Shipping documents: Commercial invoices, bills of lading, insurance certificates, consular invoices, and related documents. Draft: The same as a “bill of exchange.” A written order for a certain sum of money to be transferred on a certain date from the person who owes the money or agrees to make the payment (the drawee) to the creditor to whom the money is owed (the drawer of the draft).
In truth, unsecured financing is only for those who have a sound credit standing with their bank or have had long-term trading experience. It usually amounts to expanding already existing lines of working credit. For the small import/export business, unsecured financing will probably be limited to a personal line of credit.
A factor is an agent who will, at a discount (usually 5 to 8 percent of the gross), buy receivables. Banks do 95 percent of factoring; the remainder is done by private specialists. The factor makes a profit on the collection and provides a source of cash flow for the seller, albeit less than if the business had held out to make the collection itself.
For example, suppose you had a receivable of $1000. A factor might offer you a $750 advance on the invoice and charge you 5 percent on the gross of $1000 per month until
collection. If the collection is made within the first month, the factor would keep only $50 and return $200. If it takes two months, the factor would keep $100 and return only $150.
The importer benefits from having the cash to reorder products from overseas. For a manufacturer, the benefit can be cash flow available for increased or new production.
Other Private Sources of Financing
The United States has several major private trade financing institutions, all in competition to support your export programs.
PEFCO. The Private Export Funding Corporation (PEFCO) was established in 1970 and is owned by about 60 banks, 7 industrial corporations, and an investment banking firm. PEFCO operates with its own capital stock, an extensive line of credit from the U.S. government’s EXIMBank (see below), and the proceeds of its secured and unsecured debt obligations. It provides medium-and long-term loans, subject to EXIMBank approval, to foreign buyers of U.S. goods and services. PEFCO generally deals in sales of capital goods with a minimum commitment of about $1 million-there is no maximum. Contact: PEFCO, 280 Park Avenue (4-West), New York, NY 10017; phone: (212) 916-0300; fax: (212) 2860304; Web: www.pefco.com.
OPIC. The Overseas Private Investment Corporation (OPIC) is a private, self-sustaining institution whose purpose is to promote economic growth in developing countries. OPIC’s programs include insurance, finance, missions, contractors’ and exporters’ insurance, small contractor guarantees, and investor information services. For more information, contact: OPIC, 1615 M Street, NW, Washington, DC 20527; phone: (202) 336-8400; fax: (202) 408- 9859; Web: www.opic.gov.
Many nations are short on foreign exchange, and what they have is earmarked for priority national imports or large international credit commitments. Nevertheless, there are probably more sources of competitive financing available today to support exporting than at any other time in history. The major complaint is that not enough firms are taking advantage of the programs.
Small Business Administration (SBA). All nations support the growth of small business. For example, the U.S. government’s Small Business Administration (SBA) guarantees eight- year working capital loans for about 2.25 percent over prime to small companies that can show reasonable ability to pay. The maximum maturity may be up to 25 years, depending on the use of the loan proceeds. The SBA’s export revolving-line-of-credit guarantee program provides pre-export financing to aid in the manufacture or purchase of goods for sale to foreign markets and to help a small business penetrate or develop a foreign market. The maximum maturity for this financing is 18 months. The SBA, in cooperation with EXIMBank, participates in loans between $200,000 and $1 million.
EXIMBank. When U.S. exporters find buyers who cannot obtain financing in their own country, the Export-Import Bank of the United States (EXIMBank) may provide credit support in the form of loans, guarantees, and insurance for small businesses. EXIMBank is a
federal agency to help finance the export of U.S. goods and services. Rates vary but are available for a 5-to 10-year maturity period.
Programs include medium-and long-term loans and guarantees that cover up to 85 percent of a transaction’s export value, with repayment terms of a year or longer. Long-term loans and guarantees are provided for over 7 years but not usually more than 10 years. The Medium-Term Credit Program has more than $300 million available for small businesses facing subsidized foreign competition. The Small Business Credit Program also has funds available, with direct credit for exporting medium-term goods; competition is not necessary. The EXIM Working Capital Program guarantees the lender’s repayment on capital loans for exports.
Agency for International Development (AID). A subordinate division of the U.S. State Department, AID provides loans and grants to nations for both developmental and foreign policy reasons. Under the AID Development Assistance Program funds are available at rates of 2 percent and 3 percent over 40 years. The AID Economic Development Fund has funds at similar interest rates. Generally, these funds are available through invitations to bid placed in the Commerce Daily Bulletin, a publication-available from the Government Printing Office, Washington, DC 20402.
International Development Cooperation Agency (IDCA). The IDCA Trade and Development Program loans funds on an annual basis to enable friendly countries to procure foreign goods and services for major development projects. Often, these funds support smaller firms in subcontract positions.
Doing business always involves some risk, so you should expect across-border business to be no different. A certain amount of uncertainty is always present in doing business across international borders, but much of it can be hedged, managed, and controlled. All major exporting countries have arrangements to protect exporters and the bankers who provide their funding support. Avoiding and/or controlling risks in global trade is an everyday occurrence for importers and exporters. Understanding the instruments available for avoiding risk is not difficult but is vital. There are essentially four kinds of risks:
Most risks allow for a method of avoidance. Of course, there is no insurance against a dispute over quality or loss of market as a result of competition, but there are management instruments for three aspects of risk: not being paid, transport loss or damage, and foreign exchange exposure.
Avoidance of Commercial Risk
The seller wants to be certain that the buyer will pay on time once the goods have been shipped. The goal is at least to minimize risk of nonpayment. On the other hand, the buyer wants to be certain that the seller will deliver on time and that the goods are exactly what the buyer ordered.
These concerns are most often heard from anyone beginning an import/export business. Mistrust across international borders is natural; after all, there is a certain amount of mistrust even in our own culture. One key to risk avoidance is a well-written sales contract. In Chapter 3 you learned that an early step in the process of international trade is to gain contract agreement between yourself and your overseas business associate. The terms should include method of payment.
Ensuring prompt payment often worries exporters more than any other commercial risk. The truth is that the likelihood of a bad debt from an international customer is very low. In the experience of most international businesses, overseas bad debts seldom exceed 0.5
percent of sales. The reason is that in overseas markets, credit is still something to be earned as a result of having a record of prompt payment. Use common sense in extending credit to overseas customers, but don’t use tougher rules than you apply to domestic clients.
The methods of payment, in order of decreasing risk to the seller and increasing risk to the importer, are open account, consignment, time draft, sight draft, authority to purchase, letter of credit, and cash in advance. Table 5-1 summarizes the various methods of payment.
Open Account. The open account is a trade arrangement in which goods are shipped to a foreign buyer without guarantee of payment. Though the riskiest, this method is used by many firms that have a long-standing business relationship with the same overseas buyer.
Needless to say, the key is to know your buyer and your buyer’s country. You should use an open account when the buyer has a continuing need for the seller’s product or service. Some experienced exporters say that they deal only in open accounts. But they always preface that statement by saying that they have close relationships and have been doing business with their overseas clients for many years.
An open account can be risky unless the buyer is of unquestioned integrity and has withstood a thorough credit investigation. The advantage of this method is its ease and convenience, but with open-account sales, you bear the burden of financing the shipment. Standard practice in many countries is to defer payment until the merchandise is sold, sometimes even longer. Therefore, among the forms of payment, open- account sales require the greatest amount of working capital. In addition, you bear the exchange risk if the sales are quoted in foreign currency. Nevertheless, competitive pressures may force the use of this method