appetite for U.S. goods. U.S. merchandise
exports are also projected to increase in
designated priority markets, including
Brazil, India, Colombia, Saudi Arabia, Indonesia, South Africa, and Vietnam, due
to the National Export Initiative (NEI)
spearheaded by President Obama.
Andrew Tananbaum, Executive Chairman of Capital Business Credit, adds
that, as U.S. exports are projected to
grow, so too should U. S. export factor
business. For now, U.S. exporters are
withstanding the economic instability
throughout much of Europe, with only
slight decreases in U.S. exports. U.S.
exports of goods and services decreased
by 0.9 percent in March 2013 to $184.3
billion from February 2013, as reported
by the Department of Commerce’s U.S.
Census Bureau and the Bureau of Economic Analysis.
Even with recent drops in exports to
the EU, U.S. goods and services exports
hit a quarterly high of $554.7 billion U.S.
in the first quarter of 2013. Total services
exports in March were the highest on
record. With the major advanced economies appearing to be on the mend, hopeful signs in the Euro zone, and growth in
emerging market and developing economies, U.S. business is sure to focus in on
export business and factors will benefit
in turn. Tananbaum notes that factors
are an “entrepreneurial breed” at heart
and, where there is opportunity, factors
will find ways to extend services to their
client base when there is a need. TSL
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deals with collection and payments of
the accounts receivable.
A factor can be a very good way for small
and middle-market companies to enter
a new market abroad, says Matthew Davis, Director of Credit and Underwriting
for RMP Capital. “But there is certainly
a learning curve,” he says. While small
business owners sometimes fear the
cross-border considerations, Davis notes
that factors can provide the necessary
assurances, offering a much easier way
to get into an international market. A
factor can be a useful tool, given the
extensive knowledge they have in doing business abroad. “This is a global
economy; and, if we are doing small
business finance, factors have to handle
their global business,” he says.
J. Michael Stanley, Managing Director
of Rosenthal & Rosenthal, notes that export factoring volume is slowly increasing, with the bulk of his firm’s export
financing business representing U.S.
exports to Euro zone countries. However, data from the Central Intelligence
Agency’s World Factbook 2012 shows
that, of all U.S. exports, Canada accounted for the bulk at 18.9%, followed
closely by Mexico at 14%. But Stanley
notes growing interest in the EU, as well
as Asia and Australia. “We’re having an
increasing number of clients who are
looking for new ways to increase sales
activity,” he says. He acknowledges that
“the language barriers and the initial
investment can be daunting.” Legal fees,
exchange rates, customs and duties
are often sizeable, too. But with factors
guaranteeing the collection of receivables and dealing with the many other
country-specific considerations, U.S.
businesses are free to sell abroad.
Bibby Financial’s Lones notes, “We
see the U.S. as a key market for export
finance—both now and in the future.
The U.S. is the world’s largest economy,
although China is tracking to surpass
the U.S. by 2030.” She adds that Chinese
consumers are steadily increasing their
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