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The Role of the International Credit Application
December 09, 2021 Ken Click, Business Development Specialist & Jennifer Krause, Managing Director, Broker Accounts

An international credit application is used to evaluate the risk of doing business with a foreign buyer. It is an information-gathering document used by credit professionals to obtain supplier, bank, and other business-related information about the foreign buyer.

The supplier reference section of the application asks for references, preferably from the foreign buyer’s suppliers based in the U.S. or other countries that use hard currencies through their own banking relationships. These references could indicate how the foreign buyer is truly paying their invoices – are they paying slowly or on time? For EXIM Export Credit Insurance eligibility, obtaining a supplier reference is an option to qualify a foreign buyer up to a $100,000 credit limit and is required for a foreign buyer credit request over $100,000.

The bank reference section asks for the foreign buyer’s bank contact details. Should a credit professional contact their bank, questions about the foreign buyer such as “Does the customer have access to capital to pay the exporter?” and “How much of a line of credit is the customer using in its day-to-day operations?” could be answered. Lack of access to capital or an overextended credit line could be a problem.

The application can reveal if the foreign buyer qualifies for EXIM eligibility in other ways beyond the bank and supplier-related sections:

  • Screening the full legal company name on the Consolidated Screening List to ensure there are no “red flags.” Businesses impacted by export restrictions will turn up on this list and require further review.
  • Ensuring the business was established at least three years ago, which is an EXIM underwriting eligibility requirement.
  • Checking that the foreign buyer’s shipping and invoice addresses are located in countries where EXIM provides coverage. Sometimes a foreign buyer will ask the exporter to ship to a job site rather than their corporate office, and both addresses must be included in the application to avoid any complications.

A carefully completed international credit application is an important part of the customer due diligence process. For more information about EXIM Export Credit Insurance and requirements, please schedule a consultation with an EXIM trade finance specialist.

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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.