Export Credit Insurance through EXIM Bank provides three benefits: protection against non-payment, competitive advantage, lender relationships.
Asking your foreign buyers to pay cash up front for your “Made in the USA” product is a great deal for you, the exporter, but are you losing business to competitors who are offering credit terms?
Export credit insurance from the Export-Import Bank of the United States (EXIM Bank) provides the opportunity to offer credit terms in international markets, while protecting your foreign receivables from nonpayment. In addition to mitigating the risk of non-payment by a foreign buyer, export credit insurance can enhance your borrowing relationship with your lender. For the most part, lenders exclude uninsured foreign receivables from your borrowing base, reducing the amount of capital available to you. With an export credit insurance policy from EXIM Bank, your foreign receivables are insured at 95 percent and your lender will likely add these to your borrowing base, making more funds available to you.
Another, and perhaps most surprising reason to leverage export credit insurance is that is it a powerful marketing tool. Think about deals you have negotiated in the past. Usually the early discussions focus on product features and functionality, the opportunity for sales in the buyer’s marketplace and the logistics surrounding export-import. Rarely are credit terms discussed up front, and the discussion becomes contentious when you have been assuming cash- in -advance and your buyer has been assuming payment over time. Export credit insurance lets you turn this situation around. Knowing your receivables are insured at 95 percent enables you to offer credit terms from the start, and gives you the competitive edge you may need to win the deal.
To summarize, there are three compelling reasons to explore export credit insurance:
- Offer credit terms that are good for you and good for your foreign buyer while protecting your receivables against non-payment
- Enhance your borrowing relationship with your bank
- Leverage a powerful marketing tool for competitive advantage
Contact the Wyoming SBDC Network for more information on how to gain an export competitive advantage with export credit insurance.