Learn how Klumb Lumber uses export credit insurance to expand into new markets and protect against the risk of foreign buyer nonpayment.
Klumb Lumber, a family owned wholesale distributor of lumber and forest products, traces its roots to the sawmill industry in rural Mississippi in 1899. In 1945, with a $10,000 investment, the present day Klumb Lumber was founded and three employees began to build a company that has grown into a leading provider of lumber, building materials and specialty products worldwide. In an October 2005 interview with the Mississippi Business Journal, the late Buddy Klumb, President, quoted an old saying that he believed pertained to his company: “If you’re not growing, you’re dying.”
Growing Klumb Lumber included expanding the company’s sales outside of the United States and extending credit terms to international buyers. While exporting can create a valuable revenue stream, there can be some risks. Small companies have little recourse if an international buyer does not pay their invoices and the financial impact of nonpayment can be severe. Insolvency is only one reason a customer may not pay. Local currency fluctuations may make it difficult or impossible for the foreign buyer to meet the negotiated price on the invoice and political unrest, state actions like nationalization, or deteriorating relationships between governments can disrupt the buyer’s ability to pay. Fortunately, there are tools that can protect companies from nonpayment by foreign buyers and mitigate the risk of selling overseas.
Export Credit Insurance is the tool Klumb Lumber uses to safeguard foreign receivables. Like any insurance policy, the exporter pays a premium and the risk of nonpayment is transferred to EXIM Bank. The benefits of Export Credit Insurance are compelling:
Safeguard Against Risk
- Transfer the risk of nonpayment to EXIM
- Protect against liquidity shortages arising from delayed payments or nonpayment from overseas customers
- Reduce earnings volatility, providing certainty and peace of mind
Increase and Expand Sales
- Extend credit terms, gaining competitive advantage in international markets
- Safely enter new markets
- Expand sales to existing customers with extension of credit terms
The Klumb Lumber website highlights three core values that guide the company’s operations:
- Be fiscally conservative
- Extend credit to your customers
- Above all, do what you need to do to help them build their business
Working with EXIM, Klumb Lumber consistently upholds these values that are the foundation of the company’s success. Managing currency devaluation, creditworthiness and political risks around the world are a part of doing business today. With Export Credit Insurance from EXIM, Klumb Lumber helps customers in the Middle East, Asia, South American and the Caribbean build their businesses every day, secure in the knowledge that this family business is protected for generations to come.
Are you growing your business with international sales? Download the Guide to Export Credit Insurance and call your local EXIM representative today!