As you enter or expand into the global marketplace, Washington Trust Bank can provide you with counseling services and payment products to help increase your sales, reduce your costs and minimize the risks associated with international transactions. Note that certain products require prior credit approval.
Trade Finance Products
There are four primary methods of payment available to exporters and importers of goods and services. Each represents a different level of risk to either party in a transaction.
The methods are: payment in advance, open account, documentary letter of credit and documentary collection. Payment in advance and open account terms involve just the buyer and seller and represent the highest level of risk to one party or the other. To reduce the level of risk, banks serve as intermediaries by offering letter of credit and documentary collection services.
Documentary Letter of Credit*
A documentary letter of credit is issued by the importer’s bank on behalf of the importer and details the terms and conditions of a shipment to be initiated by the exporter. The exporter’s bank and importer’s bank will review the documents for compliance to the documentary letter of credit. Compliance assures that the importer will receive the expected product and the exporter will receive the expected payment.
A documentary collection sends the shipping documents through the banking system without the banks’ review. However, the documents are not released to the importer without its agreement to make the payment to the exporter.
Standby Letter of Credit *
A standby letter of credit represents a secondary method of payment and mitigates the risk of possible payment failure of one of the four primary payment methods. Purposes include a bid or performance bond, support for a loan or unpaid invoices made on an open account transaction.
A standby letter of credit can be used for international trade or domestic purposes.
Foreign Exchange Products**
Foreign Exchange products are available only to Washington Trust Bank customers.
Wire transfers: Send or receive payments denominated in foreign currency and U.S. dollars. For incoming foreign wires in either foreign currency or U.S. dollars, please follow WTB’s incoming wire instructions. Our SWIFT code is WTBAUS66.
Forward contracts*: Secure foreign exchange rates for a future delivery date to protect profit margins.
Foreign drafts: Provide drafts that are payable in a foreign currency.
Foreign check clearing: Deposit checks drawn on banks outside the U.S. that are denominated in either U.S. dollars or foreign currency.
Foreign currency banknotes: Buy or sell 90+ varieties of foreign currency banknotes.
Foreign Accounts Receivable Insurance
An exporter can offer open account payment terms to a buyer for a greater chance of a sale, but with an increased risk of non-payment. By obtaining credit insurance on the buyer, the risk is significantly reduced and can be used to create collateral to support working capital financing needs. Washington Trust Bank can help in finding the most appropriate insurance coverage.
SBA Export Loan Guaranty Programs
Washington Trust Bank is an active Small Business Administration (SBA) lender and is involved with SBA’s three export loan guaranty programs:
International Trade Loan*
Term loans to businesses that plan to start or continue exporting or that have been adversely affected by competition from imports. Funds can be used for the acquisition, construction, renovation, modernization, improvement or expansion of long-term fixed assets; or re-financing of debt and working capital. Maximum lending amount is $5,000,000.
Helps businesses develop/expand their export markets. Maximum lending amount is $500,000.
Export Working Capital*
Targeted to businesses that are able to generate export sales and need additional working capital to support such sales. Funds can be used for transaction financing from purchase order to final collections. Maximum lending amount is $5,000,000.
*Subject to credit approval
** Foreign exchange products and services are available only to Washington Trust Bank customers.