This document provides an overview of strategies for companies looking to expand globally. It discusses three keys to developing a cross-border expansion plan: 1) Configuring account structures with scalable foundations for growth, 2) Doing business in local currencies to gain efficiencies and expand markets while managing exchange rate risk, and 3) Growing cross-border relationships to manage trade risks and maximize working capital. The document then covers each of these areas in more detail and provides examples, tools, and considerations for international payments, foreign exchange, letters of credit, and other strategies. It aims to help companies manage risks and enhance their chances of success when expanding business operations across borders.

1. Global Expansion
June 3, 2015
A treasury road map towards
cross-border success

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Today’s agenda
• Business at the global inflection point
• The three keys to a plan
– Configuring account structures: Your foundation for growth
– Doing business in the local currency: Gain efficiency and expand markets
while managing exchange rate risk
– Growing cross-border relationships: Manage trade risk and maximize
working capital
• Conversation with iRise Controller Peter Felesina
• Your road map

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Business at the global inflection point
• We see innovation companies going global at an early stage.
• Our clients frequently ask us for advice about this challenging
transition. For some, it’s complex and scary, carrying
commercial, political and currency risks.
• When done right, it can deliver a competitive advantage,
opening new markets, and creating operational efficiencies.
• Today, our panel will show you how to manage those risks
and enhance your chances of success.

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Cross-border momentum
Source: Silicon Valley Bank Innovation Economy Outlook 2015 Survey
Over two-thirds of revenue-generating companies in our latest
Innovation Economy Outlook survey expect to earn revenue
abroad in 2015

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Audience poll
Where are you on the road to becoming a global business?
Pick one:
o I am already active across borders.
o I will start within the next 12 months.
o I haven’t decided when to start.

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Configuring account structures
Anne Bacher
Senior Advisor, Global Treasury & Payments

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A strategic approach to account structure to
support cross-border transactions
• Scalability — Create an account structure that grows
with your business
• Visibility — See where your money is throughout
the business cycle
• Control — Manage risk by separating accounts
and controlling activity from a central banking platform

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Accounts and payments to support
international transactions – Initial Stage
Digital banking platform for visibility and control
Activities and flows:
1. International payments are typically
for purchasing parts overseas
or to pay for outsourced work.
2. Receipts consist of investor funds
and distributor payments.
3. U.S. dollar wires for payments
in and out.

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Supporting international transactions
as activities expand
Digital banking platform for visibility and control
Activities and flows:
1. International payments are typically
for purchasing parts overseas
or to pay for outsourced work.
2. Receipts consist of investor funds
and distributor payments.
3. U.S. dollar wires for payments
in and out.
4. Add FX wires as demand warrants.

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Supporting international transactions
as currency activity grows
Digital banking platform for visibility and control
Activities and flows:
1. International payments are typically
for purchasing parts overseas
or to pay for outsourced work.
2. Receipts consist of investor funds
and distributor payments.
3. U.S. dollar wires for payments
in and out.
4. Add FX wires as demand warrants.
5. Add currency account as volume
in a specific currency grows.

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Supporting international transactions
and in-country activity
Activities and flows:
1. International payments are typically
for purchasing parts overseas
or to pay for outsourced work.
2. Receipts consist of investor funds
and distributor payments.
3. U.S. dollar wires for payments
in and out.
4. Add FX wires as demand warrants.
5. Add currency account as volume
in a specific currency grows.
6. Form sales and marketing subsidiary
in Japan. Keep billing and collections
in the US. Open in-country account
with local bank.
• Use SVB Online Banking portal to
gain visibility and transfer funds
to and from in-country accounts.
Digital banking platform for visibility and control

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Doing business
in the local currency
Nate Wyne
Foreign Exchange Advisor

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How foreign exchange can help you build markets
and your bottom line
• You can benefit from transacting in the local currency rather
than U.S. dollars, whether you’re funding an international office,
paying vendors or invoicing across borders.
– Expand markets by eliminating currency exchange tasks and costs
for your cross-border business partners.
– Gain additional control, transparency and cost savings for your
international payables and receivables.
– Manage currency volatility risk through commonly used hedging tools.
– Enable accurate financial forecasting for overseas accounts and activity.

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Why the exchange rate today could be different
from the rate in this morning’s newspaper
Source: Bloomberg, Japan Yen vs U.S. Dollar
JPY RATE
Because it’s a moving market!

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Managing foreign exchange risk
• Managing FX risk is necessary to mitigate the risk
of currency volatility.
• Ignoring FX risk has several pitfalls:
– U.S. companies with un-hedged foreign currency payables or receivables
may see topline earnings volatility.
– U.S. exporters gain a competitive advantage by invoicing product in foreign
buyers’ home currencies.
– Foreign sellers charge a premium to invoice in U.S. dollars, but hedging
foreign payables through forward contracts involves no fee.

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Misconception: Companies are immune to foreign
currency dynamics
• Reality: Pricing and reporting in U.S. dollars does not
mitigate currency risk.
– Example: If the U.S. dollar strengthens, it will cost your customer
more in his or her local currency to pay you.
– This can create business risk for you if the customer defaults or
cancels purchases and goes to another company that prices
in its own currency.
• Outcome: Companies big and small, private and public can
benefit from FX hedging.

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Managing the risk of currency volatility
How direct FX payment can improve transaction efficiency

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Growing cross-border
relationships
Dennis Brown
Senior Trade Finance Advisor

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International risks
• Commercial
– Slow payment
– Bankruptcy
– Contract repudiation
– Contract dispute
• Country/Sovereign
– Foreign exchange control
– Payment moratorium
– Civil unrest, war, natural disasters
• Performance
– Quality of goods
– Delivery
– Foreign exchange fluctuation

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Forms of Payment and Risk Hierarchy
• Open account
• Cash in advance
• Documentary Collection
• Letter of Credit

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Questions to ask before selecting method of payment
• What’s our leverage with this buyer or seller?
• Can the business afford the loss if it is not paid or shipped on
time?
• Will the sale still be profitable if we extend credit and wait
several months?
• How will this sale affect my Days Sales Outstanding (DSO)?
• If the shipment is made and not accepted, can an alternative
buyer be found?
• Is the product off the shelf or made to order?

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Gaining assurance: Using a Letter of credit
What it is
– A bank’s irrevocable commitment to pay the beneficiary when documents
are submitted
How it works
– An issuing bank for the buyer substitutes its credit for the buyer’s,
assuring the beneficiary that the bank will pay, provided the terms and
conditions of the LC are met.
Commercial Letter of Credit
• Involves shipment of goods or
performance of services
• Primary payment instrument
Standby Letter of Credit
• Not intended to be drawn upon
• Functions as a guarantee

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To importerTo exporter
Benefits of commercial letter of credit
• Issuing bank’s credit replaces the
buyer’s credit.
• Eliminates foreign bank and country
risk if confirmed by Silicon Valley Bank
or any U.S bank.
• Protects seller against order
cancellation; provides highest degree
of protection short of cash in advance.
• Seller can forecast cash better and
improve Days Sales Outstanding (DSO)
• Provides built-in financing mechanism
that will allow the exporter to have SVB
discount the transaction to receive
payment prior to maturity
• Assures that payment will not be
made until documentation proving
shipment of the merchandise is
submitted to the bank.
• Extended payment terms may be
granted by permitting drafts drawn
under the LC to be payable at
a future date.
• Importer can set up a shipping
schedule to which the seller must
adhere in order to be paid.

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Ensuring commitments
Standby letters of credit
An issuing bank's irrevocable commitment to make good on an agreement if the
applicant fails to fulfill his or her contractual obligation.
How it works
– Supports applicant’s obligation under a contract or agreement by adding bank’s
commitment to make sure terms are met.
– If the applicant fails to comply with the terms of the agreement, the bank must pay
the beneficiary when documents are presented in compliance with the terms and
conditions of the letter of credit.
– Secondary mechanism of payment : The letter of credit should be drawn on only
if the applicant fails to fulfill his or her obligation covered in the underlying contract.

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Standby letters of credit: Frequent uses
• Invoice support/credit limits
• Leases/office or equipment
• Bid bonds
• Advance payment
• Performance bonds
• Surety bonds
• Bank guarantees

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Conversation with iRise
controller Peter Felesina
Peter Felesina
Corporate Controller, iRise

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Your road map
Global expansion can open up new possibilities of growth
for your company. To seize those opportunities while managing
risks, focus on three things:
Configuring account structures for maximum control
– Create an account structure that scales as your business grows.
– Manage risk by separating accounts and managing activity from a central
banking platform.
Do business in the local currency
– Gain efficiency and expand markets by doing business in the local currency.
– Manage exchange rate risk with common hedging tools.
Grow cross-border relationships
– Expand relationships through guarantees and finance options.
– Maximize working capital by extending payments and accelerating revenue.

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Questions?

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Today’s speakers

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Peter Felesina
Corporate Controller, iRise
Peter Felesina is Corporate Controller for
iRise, a global leader in enterprise
visualization and simulation software. He
has previously been a controller for
software companies Apriso Corp., and
Peerless Systems Corp., and held
additional finance roles at other
companies. He earned an MBA in
Finance from San Diego State University
and a bachelor’s degree in accounting
from University of Nevada, Reno.

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Anne Bacher
Senior Advisor, Global Treasury
and Payments, Silicon Valley Bank
abacher@svb.com
650.855.3084
Anne Bacher has more than 20 years of
experience in treasury management as
both a corporate practitioner and an
advisor to bank clients. At SVB, Anne
delivers strategic and tactical guidance on
worldwide account and service solutions
to clients. Previously, as a treasury
manager for several major technology
companies, including Apple and
Electronic Arts, Anne specialized in
treasury operations, treasury systems and
the creation of SOX 404 Controls. She
earned her bachelor’s degree in
economics and in history from UC
Berkeley, and she holds the Association
for Financial Professionals’ Certified
Treasury Professional (CTP) designation.

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Nate Wyne
Foreign Exchange Advisor,
Silicon Valley Bank
nwyne@svb.com
818.382.2671
Nate Wyne is the Southern California
foreign exchange advisor for Silicon
Valley Bank. Nate hold a bachelor’s
degree from the University of Utah in
international studies for business. Nate
partners with his clients to create and
implement sound risk-management
practices around foreign exchange and
cash management. After completing his
undergraduate degree, Nate pursued a
career in retail banking before moving to
commercial and eventually corporate
banking. With 13 years of banking
experience across the full gamut of
advisory roles – Nate enjoys helping
growing businesses focus on what they
do best.

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Dennis Brown
Senior Trade Finance Advisor,
Silicon Valley Bank
dbrown@svb.com
949.754.0838
Dennis Brown functions as a senior trade
finance advisor in the International Group
responsible for providing guidance as well
as delivering tools to clients as they
venture into cross-border markets. He
focuses on our clients' financial supply
chain and their efforts to improve working
capital metrics and mitigate risks. Dennis
joined Silicon Valley Bank in 2010 after
working with several money-center and
international banks. His 30-plus years’
experience in both trade operations and
business development allows him to act
as a trusted advisor to our clients. Dennis
obtained a Bachelor of Science from the
University of San Francisco.

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About SVB
For more than 30 years, Silicon Valley Bank has helped innovators and
their investors move bold ideas forward, fast. Today, we provide a full
range of banking services to companies of all sizes in innovation centers
around the world.
To learn more, call your relationship manager at 408.654.7400, or visit
our website at www.svb.com.

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Disclaimer
Foreign exchange transactions can be highly risky, and losses may occur in short periods
of time if there is an adverse movement of exchange rates. Exchange rates can be highly
volatile and are impacted by numerous economic, political and social factors, as well as
supply and demand and governmental intervention, control and adjustments. Investments
in financial instruments carry significant risk, including the possible loss of the principal
amount invested. Before entering any foreign exchange transaction, you should obtain
advice from your own tax, financial, legal and other advisors, and only make investment
decisions on the basis of your own objectives, experience and resources. Opinions
expressed are our opinions as of the date of this content only. The material is based upon
information which we consider reliable, but we do not represent that it is accurate or
complete, and it should not be relied upon as such.
©2015 SVB Financial Group. All rights reserved. Silicon Valley Bank is a member of FDIC
and Federal Reserve System. SVB>, SVB Financial Group, and Silicon Valley Bank are
registered trademarks.

36. Thank you.
www.svb.com