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Negotiate competitive credit terms with your foreign buyers
July 21, 2016 Sharyn H. Koenig, Managing Director, Small Business Group

Negotiating with Foreign Buyers is a Two-Way Street

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 commercial brokers and 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.  But it doesn’t have to be all or nothing.  Whether you are establishing a new B2B relationship, entering a new market or simply want your customers to be engaged in the transaction from the start, you can offer mixed terms like 20 percent down payment upon order and the remainder paid in 60 days.

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.

The third, 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

U.S. Government agencies have a wealth of resources to help you grow your business through exporting. EXIM Bank trade finance directors are located throughout the country and work hand-in-hand with the Small Business Administration (SBA) and Department of Commerce (DoC) to meet all of your small business exporting needs.  If you want to learn more, request a consultation with one of our local trade specialists or locate the Regional Export Finance center closest to you and give us a call  EXIM Bank Regional Export Finance Centers.

Get a Free Export Finance Consultation Today!


EXIM’s Blog postings are intended to highlight various facets of exporting, but the postings are not legal advice, and are not intended to summarize all legal requirements associated with exporting.