Collection 2000 Cosmetics, Inc. is a manufacturer and marketer of personal care and perfume products targeting women. Although their products are made and branded for consumers, their buyers are distributors and resellers. Based in Florida, the company is a small business fully owned and operated by women and currently has customers in 29 countries.
Collection 2000 had long been a customer of the Export-Import Bank of the U.S. (EXIM) and used Multi-Buyer Export Credit Insurance to send dozens of shipments to foreign buyers. This insurance policy allowed them to sell to customers in many different countries, mitigating the risk of nonpayment, while equipping them to provide their customers open account terms.
Then it happened. Collection 2000 shipped more than $100,000 worth of products to a longtime customer in Trinidad and Tobago. Up until that point, the buyer had always been diligent about paying on time. As with previous orders, the buyer was given 60-day credit terms. However, the invoice due date came and went and the payment never arrived.
Collection 2000 made several attempts to contact the buyer to collect the outstanding debt to no avail. The buyer kept saying it would wire the funds the next day, but never transferred the payment as promised. In a last ditch effort to collect the payment, Collection 2000 commissioned a law firm to follow up with the buyer one last time.
With the invoice four months past due, Collection 2000 filed a claim with EXIM. Through EXIM’s policy, Collection 2000’s invoiced amount was covered at 95 percent against buyer default, with no deductible. After carefully assessing the situation and reviewing the supporting documents, EXIM approved and paid Collection 2000’s claim in June 2014, less than a month after filing.
With EXIM’s export credit insurance in hand, Collection 2000 was able to recoup 95 percent of its loss. Additionally, as a small, women-owned business, Collection 2000 is able to continue to compete internationally with no fear. Collection continues to offer competitive payment terms to its foreign buyers with the peace of mind that it will get paid if anything goes wrong.
Learn more about how export credit insurance can assist your business to manage the risk of foreign customer nonpayment. Get the essential guide to mitigating the risk of nonpayment, the Guide to Export Credit Insurance.