Cash is king. Take it all day long if you can get it. But insisting on cash-in-advance is also a great way to give your competitors an advantage if they are offering open credit terms. This was the situation for Coral Steel, a West Palm Beach, Florida, manufacturer of concrete construction products that temporarily lost existing customers by requiring cash up front.
After years of doing business with valued international customers, orders were not coming in. Upon checking with the companies, Coral Steel learned that a competitor offered open credit terms for similar products, and captured the business. Working with their local EXIM Regional Director, Coral Steel applied for export credit insurance, was approved in less than 24 hours, won back their previous clients and received referrals from those clients to other buyers in their area.
The challenge for exporters, particularly small businesses, is clear. Selling to international buyers on open account credit terms is risky. If they don’t pay, there is very little recourse for the U.S.-based company and the financial hit can be significant.
Export credit insurance empowers businesses of all sizes to negotiate competitive credit terms with foreign buyers and increase revenues by selling to new customers in new markets. In the case of Coral Steel, export credit insurance was the key to recapturing valued customers and doing business with new ones. Knowing that the receivables generated by international sales were insured up to 95 percent, Coral Steel was able to compete successfully for the business by offering open credit terms, and customers in the Caribbean had access to U.S. made concrete reinforcing steel and related products.
So maybe cash isn’t king after all. Use EXIM's export credit insurance to mitigate the risk of nonpayment, increase revenues streams and become a global supplier. Hedge your bets by not relying on the ups and downs of one market’s economy. Smooth seasonal demand for your products. Embrace exporting in an informed manner. When asked what advice he would give other small businesses, Lee Disbury, Coral Steel’s Vice President says:
“Exporting is a great way to open new markets. Go to a seminar and learn about the benefits, keep your eyes open for new opportunities, then jump in. Become an EXIM client and you can easily expand your off shore customer base and grow your business.”
Want to learn more? Contact your local EXIM Bank representative for a free consultation.