Canadian companies looking to sell beyond our borders and diversify into new global markets are on the rise.
It’s a smart move.
Research shows Canadian companies that sell internationally pull in 121% more revenue on average, are more innovative, enjoy increased longevity, and are more resilient to downturns in the economy.
That makes exporters good long-term clients for financial institutions. More Canadian businesses are looking to financial institutions to help them grow; providing them with the right solutions can help financial institutions reach their own corporate goals:
- increasing revenue,
- extending deal capacity,
- improving client experience, and ultimately,
- building a larger, more robust client base
“Our goals go hand in hand”
As much as trusted financial advisors would like to support clients as their businesses grow, there are increased risks—from non-payment to performance guarantees being called without cause—with international trade.
But Daniel Côté, associate vice-president—international at National Bank of Canada, has been working alongside Export Development Canada (EDC) for more than 15 years to overcome these risks.
EDC’s mission is to help Canadian companies grow beyond the domestic market. Clearly, our goals go hand in hand.
“My team’s mission is to bring in clients for our bank that are selling outside of Canada,” Côté explains. “EDC’s mission is to help Canadian companies grow beyond the domestic market. Clearly, our goals go hand in hand.”
Côté says he leads a team of 20 international trade managers who cover all regions of Canada. Members of his team work with EDC account managers on a weekly—or even daily—basis.
“As we look for ways to support our clients’ growth abroad, we see the same growing pains again and again,” Côté says. “With some clients, it quickly becomes apparent they’re unaware of EDC and the solutions they offer. As a result, they’re having more difficulty achieving international growth because they present too much risk for the typical bank.”
Overcoming challenges with help from EDC
Côté uses the synergy between National Bank and EDC to improve the client experience. “We solve so many problems by partnering with EDC to help our clients develop foreign exchange strategies, protect their bottom line against risk, and secure payment when they’re dealing internationally,” he says. “It’s our offer plus EDC’s offer that creates the ‘wow factor’ for these companies.”
We solve so many problems by partnering with EDC to help our clients develop foreign exchange strategies, protect their bottom line against risk, and secure payment when they’re dealing internationally.
One problem his team sees frequently is companies using their line of credit to issue letters of guarantee for their overseas contracts, tying up 50% or more of their line of credit. This severely restricts the company’s cashflow to carry out their international business.
“To solve the problem, we onboard EDC and explain to our client how EDC’s Account Performance Security Guarantee (APSG) works—it gives our bank a 100% backing from EDC on these specific transactions, greatly diminishing the risk for us,” says Côté. “Then our client is ecstatic to simply pay a small APSG premium to EDC, and we can unlock the line of credit.”
Managing risk to drive results
Côté’s team also recommends EDC’s Credit Insurance early on in their client relationships.
“When a company starts selling further afield such as Latin America, Southeast Asia or Europe, they start to get nervous about not being paid. So, as soon as they mention they’re expanding abroad, we bring credit insurance up and ask them if they’re going to offer terms to these new clients and if so, how they’ll manage the risk.”
When a client purchases a credit insurance policy from EDC, the proceeds can be assigned to the financial institution, which increases the lending capacity attributed to the client’s receivables.
“An added bonus with credit insurance is that it helps our clients credit-wise because our bank can give greater value for receivables if they’re insured,” It’s a plus for both sides: We have additional security for the risk, our client gets to have additional financing, and we can grow our client base more easily,” Côté says.
They recommend credit insurance for companies that have added risk such as those that only have a few customers. “This allows us to take on clients that we otherwise might not be able to, enabling us to help younger companies who typically don’t have a lot of customers yet.”
Building confidence in global trade to support clients
Even when a client doesn’t warrant an immediate solution, Côté directs them to EDC’s website. “EDC has a lot of what I call soft offers, with webinars, tools and educational material that can help companies see the benefits of selling beyond Canada’s borders and teaching them how to do it.”
They’re looking at each bank’s unique business model and working hard to see how they can adapt their products to our needs. EDC listens to us, and wants to know what’s working, what’s not, and how can we make things better.
Moving forward, Côté is pleased at how EDC’s dedicated bank channel continues to build relationships with financial institutions across Canada. “They’re looking at each bank’s unique business model and working hard to see how they can adapt their products to our needs. EDC listens to us, and wants to know what’s working, what’s not, and how can we make things better.”
Summing up, he says, “If you’re involved in international trade, EDC is a huge player in that field. Working with them, we’re able to do the best job for our clients.”
EDC’s full suite of solutions helps manage the risks to your financial institution, so you can focus on doing more—and saying “yes” to clients more often.