1. 1 GETTING PAID BY YOUR FOREIGN BUYER Presented By Nellie Smith Vice President Global Trade Services

2. COMMON METHODS OF PAYMENT WHEN SELLING OVERSEAS Cash In Advance Letters of Credit - Confirmed and Unconfirmed Documentary Collections Open Account 2

3. CASH IN ADVANCE Most secure for exporter…… however… Insisting on Cash in Advance could cause exporters to lose customers to competitors who offer more favorable terms to foreign buyers. Buyers may not want to wire cash because they bear the risk of never receiving the goods. Cash is Advance recommended for custom orders where the product cannot be sold to another buyer. 3

4. EXPORT LETTERS OF CREDIT Irrevocable – Cannot be changed or cancelled without the consent of all parties. Buyer cannot refuse payment by raising a complaint about the goods. Any complaints must be settled between the Buyer and Seller outside of the L/C. Confirmed LCs vs. Unconfirmed (Advised) 4

5. Exporter can offer credit to buyers and not have to wait to be paid. Term LCs – WB can discount the drafts on presentation so customer does not have to wait to be paid 30, 60 90 days etc. Most foreign buyers willingly absorb the discount charges because their banks’ interest rates can be as high as 24%. WB all in discount charges are 6% to 7%. 5 OFFERING CREDIT TO FOREIGN BUYERS

6. OTHER TYPES OF LETTERS OF CREDIT STANDBY LETTERS OF CREDIT – Apply in general to transactions which are based on the concept of default by the Applicant in performance of a contract or obligation. In the event of default, the beneficiary is permitted to draw under the Letter of Credit. Not normally used for the purchase/sale of goods, but can be structured to cover non payment of invoices. BONDS AND GUARANTEES – Beneficiary requires guarantee to be issued by a local foreign bank. 6

7. DOCUMENTARY COLLECTIONS DOCUMENTS AGAINST PAYMENT PROS - Offers good security to the seller because the Collecting Bank can only release documents to the buyer if full payment made. Exporter retains title to the goods until the importer pays. CONS – Buyer can decide he does not want the shipment and does not have to pay. Seller still retains title to the goods but would then have to find another buyer in that country or have goods shipped back, at seller’s expense. 7

8. OPEN ACCOUNT Seller (Exporter) ships goods and invoices Buyer (Importer). Seller has to wait for Buyer to make payment. Only advisable if Buyer has excellent credit rating and is a long-time, well-known customer of Seller, usually in low risk country. Financing and non payment risks borne by the Seller. Exporter should consider having Foreign Buyer Insurance from ExIm, if shipping on Open Account basis. Not a recommended payment method. 8

9. TIPS FOR EXPORTERS Communicate with Buyers in detail before accepting a Letter of Credit. The LC is part of the sales process. Consider whether a confirmed Letter of Credit is needed. If in doubt, seek advice from your bank. Ask for a “draft” of the LC before it is issued, so terms and conditions can be reviewed and agreed upon. Have a competent Freight Forwarder to assist with the preparation of the shipping documents. 9

10. FOREIGN EXCHANGE SERVICES SPOT DEAL: A transaction between a client and Whitney Bank who will buy or sell foreign currency with settlement in two business days (with the exception of the Canadian Dollar, which is one business day). FORWARD CONTRACT: A transaction between a client and Whitney Bank who will buy or sell foreign currency with settlement on a specified future date, or between specified future dates at an exchange rate agreed upon at the time of entering into the contract. 10

11. QUESTIONS?QUESTIONS? 11

12. CONTACT INFORMATION Nellie Smith Vice President Whitney Bank Global Trade Services nellie.smith@whitneybank.com Office - 504-586-7305 12