A Competitive Edge (OPINION)

We all know that living in Northwest Arkansas isn’t like living anywhere else.

We have everything from small operations to Fortune 500 companies. The numbers of national and international companies represented are increasing all around us. We have suppliers for larger distributers and we have sole proprietors serving all the others. Diversity in types of businesses is not our problem in Northwest Arkansas, that’s for sure.

We have such a complex grouping of businesses represented across our region, and each type of business comes with its unique set of financial needs. Increasingly — and especially in our region — international banking and foreign-exchange services provide assistance and much-needed competitive edge to companies growing and serving in international markets.  And, once mainly an arena for large, multi-national corporations, international transactions are now commonplace for small and medium-sized businesses, as well.

Who can benefit from these types of banking services?

The diversity of clients participating in global trade continues to expand significantly. Any business that transacts outbound or incoming foreign payments in local currencies can benefit from partnering with a financial institution that is a direct participant in the foreign-exchange market because it allows for doing business in the other country’s currency. Businesses often find that partnering with a financial institution that is a direct participant in the foreign exchange market can save money by transacting both outbound and incoming foreign payments in local currencies. Invoicing and paying in local denominations can help maximize the value of payments on the exchange-rate front.

As an example, John Brown University operates several summer study abroad programs that are taught and led by JBU professors. The university also operates a semester-long program in Northern Ireland. Each fall, students travel throughout Ireland while studying Irish culture and literature. Our team of international bankers worked with the university to secure a better exchange rate on currency for students and the college’s operational business payments.

In addition, we set them up on our FX Advance platform. This Web-based system allows the college to view real-time streaming exchange rates for spot payments or to book forward contracts to help manage foreign exchange-rate risk. By controlling the exchange process, we help clients access competitive exchange rates while minimizing transfer fees.  In JBU’s case, updating these processes resulted in excellent cost savings for the university.

Demand for these types of international business solutions are on the rise. Our foreign exchange trading desk — which helps clients send and receive payments in foreign currency through wire transfer, payment orders or collection — saw a 15 percent increase in the value of foreign denominated client trades and a nearly 13 percent increase in the number of transactions booked in 2014 over the previous year.

Trade services, such as cross-border payment methods or export letters of credit have become increasingly in demand. Our client requests for export letters of credit, which mitigate risk and accelerate payments with a foreign business partner, grew 46 percent in 2014.

Many of these services can be managed by the business through Web-based trading systems. They ensure a secure and efficient transaction, with real-time streaming exchange rates and reporting functionality. These systems enhance reporting capability and most are accessible 24 hours a day, seven days a week, so that you’re banking when you want. 

In addition to the points above, the compliance and regulatory environments continue to evolve. It’s beneficial to a company to partner with a financial institution that can provide training to their sales and finance teams to better understand their risks as well as assist with full document preparation, reporting and payment services so they can focus on their core business.

Leveraging international solutions for companies that conduct business outside of the United States allows business owners to work with ease and confidence. How can increasing international banking services help your business in 2015? 

Jett Cato is president and CEO of Bank of Arkansas. He can be reached at 479-937-2655 or by email at [email protected].