I wish I had known about the Export-Import Bank of the United States (EXIM) when I worked at a small company. EXIM’s Export Credit Insurance would have saved my company a lot of stress and provided cash flow during some unexpected issues with its exporting adventures.
My experience -Does this scenario sound familiar to you?
Our company’s president was a world traveler and wanted our goods available in retail stores around the world. I was tasked to set up sales processes using his familiar term “with a shoe-string budget.”
We simply needed more customers or “eyeballs to see” our products in convenient places where people visit to spend their money. Using international distributors was our best option.
We moved through the process with a trusted freight forwarding company to help us with the shipment documentation to three different foreign distributors in three countries as a conservative expansion of our business to gain international sales.
We were pleased with our efforts --until-- the freight forwarder informed us that one of our shipments arrived but were placed in a HOLD location by the foreign government in their customs area. Negotiations between the two countries dragged on for 18 months. During this time, we did not receive payment from the international distributor even thought shipments were confirmed as received. The international distributor cancelled the order within five days after negotiations between countries were finalized.
Solutions to Keep Cash Flowing During These Types of Situations
If we had an EXIM Express Credit Insurance policy in place before we shipped our merchandise, we could have used the freight forwarders' documentation to our advantage. The documentation could prove that our shipments arrived in the foreign country and were delayed by actions of the foreign government. Actions that were beyond our control. We also could prove that we did not receive payment within our agreed 60 days payment terms and cancellation of the order as further evidence for nonpayment. With EXIM's Export Credit Insurance, we would have been protected from nonpayment for our foreign accounts receivable relating to political or commercial risk. Lesson Learned: We could have received 95% of the invoice value if we had EXIM's insurance in place by submitting a claim. Upon receipt of the claim monies, we would have maintained some cash flow coming into our small company.
EXIM has several different types of export credit insurance policies available for you to determine the best policy that may meet your company's needs. Here is a quick video about how it works. Request a free EXIM consultation with an EXIM trade finance specialist today!