how to get paid internationally bizfair 2018
TRANSCRIPT
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How To Get Paid Internationally
BizFair 2018
Renton – September 2018
John Brislin – Regional Director – Seattle Regional Export Finance Center – EXIM Bank
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Export-Import Bank of the U.S.
EXIM Bank is the official Export Credit Agency (ECA) of the U.S. Government.
Mission: To supports the sales of U.S.-made goods and services to create and maintain American jobs.
Established in 1934
Headquartered in Washington, D.C.
12 Regional Offices nationwide
Self-Sustaining
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EXM Bank – Strategic Partners
Loans •Delegated Authority Lenders
Policies •Registered Insurance Brokers
Outreach
•Regional Export Promotion Program Participants
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Our Financing Support Makes the Difference
EX-IM Bank supports U.S. EXporters (Sellers) of U.S. Made Goods and Services.
EX-IM Bank also supports Foreign IMporters (Buyers) of U.S. Made Goods and Services.
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Risk Protection International sales are challenging enough without the added risk of not receiving payment for your goods or services. EXIM’s export credit insurance provides payment coverage for both commercial and political risks. Moreover, your business can count on EXIM to protect your export sales to a single buyer or multiple buyers.
Working Capital An EXIM guaranteed credit line may provide the vital funds you need to fulfill new orders. These funds may be used to purchase finished products, raw materials, and supplies as well as cover labor and overhead costs. This guaranteed credit line may even cover standby letters of credit used as performance bonds or bid bonds.
Extend Credit to Buyers EXIM’s export credit insurance enables your company to offer competitive “open account” terms instead of requiring your foreign buyers to pay cash-in-advance, use credit cards, or secure letters of credit. Furthermore, your insured foreign receivables may be assigned to a commercial lender, thereby increasing your company’s borrowing base and accelerating its cash flow.
Term Financing EXIM can provide your foreign buyers with term financing at competitive interest rates and longer repayment terms. Foreign buyers can use these funds to buy U.S.-made capital goods and services, helping your business go global.
EXIM Bank Products
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Payment Method Considerations
U.S. Exporter (Seller) wants to receive payment as soon as possible
Importer (Foreign Buyer) wants to delay payment as long as possible
High Risk Buyer Risk Low Risk
Low Risk Seller Risk High Risk
Cash in Advance Letter of Credit Documentary
Collection Open Account
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Cash in Advance
Applicability
Recommended for use in high-risk trade relationships or export markets, and
appropriate for small export transactions
Risk
Exporter is exposed to virtually no risk as the burden of risk is placed almost
completely on the Importer
Pros
Payment before shipment
Eliminates risk of non-payment
Cons
May lose customers to competitors over payment terms
No additional earnings through financing operations
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Letter of Credit Applicability
Recommended for use in higher-risk situations or new or less-established trade
relationships when the Exporter is satisfied with the creditworthiness of the Buyer’s
bank
Risk
Risk is spread between Exporter and Importer, provided that all terms and
conditions as specified in the LC are adhered to
Pros
Payment made after shipment
A variety of payment, financing and risk mitigation options available
Cons
Labor intensive process
Relatively expensive method in terms of transaction costs
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Documentary Collection
Applicability
Recommended for use in established trade relationships, in stable export markets
and for transactions involving ocean shipments
Risk
Riskier for the exporter, though D/C terms are more convenient and cheaper than
an LC to the Importer
Pros
Bank assistance in obtaining payment
The process is simple, fast, and less costly than LCs
Cons
Banks’ role is limited and they do not guarantee payment
Banks do not verify the accuracy of the documents
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Open Account Applicability
Recommended for use (a) in low-risk trading relationships or markets and (b) in
competitive markets to win customers with the use of one or more appropriate trade
finance techniques
Risk
Substantial risk to the exporter because the Buyer could default on payment
obligation after shipment of the goods
Pros
Boost competitiveness in the global market
Help establish and maintain a successful trade relationship
Cons
Significant exposure to the risk of non-payment
Additional costs associated with risk mitigation measures
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Open Account Considerations
Selling on credit is a requirement in today’s economy
Most companies can’t compete domestically or globally unless they can offer credit terms
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How Goods Are Sold Across International Borders
15% of World
Trade
is done on
Secure Payment
Terms
85% of World
Trade
is done on Open
Account Terms
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Export Credit Insurance
Resources to Assist Exporters to
Sell Competitively Overseas
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Export Credit Insurance
Insurance against non-payment of
foreign accounts receivable
NOT a means to make bad credit
good
NOT primary source of
repayment
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Benefit: Risk Mitigation Tool
Export Credit Insurance allows U.S.
Exporters to safely offer extended
credit terms to their Foreign Buyers
EXIM Bank provides 95% coverage
against Commercial & Political
Risks on Foreign Accounts
Receivables for Small Businesses
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Benefit: Sales & Marketing Tool
Export Credit Insurance can help to provide:
Increased sales to existing
customers in existing markets
New sales to new customers
in existing markets
New sales to new customers
in new markets
that might not ordinarily happen without the use of export credit insurance product support.
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Benefit: Financing Tool Leverage Export Credit Insurance for your financing needs
Exporter can assign payment of the policy proceeds on their insured Foreign Receivables to their Lender
Lender can then add the Exporter’s Foreign Receivables into their Borrowing Base
Banks can lend more capital to Exporter against insured Foreign Receivables on better financing terms
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Types of Risks Covered
Commercial Risks covered Insolvency
Bankruptcy
Protracted Default
Political Risks covered War, Revolution
Cancellation of import/export license
Currency Inconvertibility
Buyer / Seller disputes not covered
Contract Cancellation not covered
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Percentage of Risks Covered
Small Business Exporter
Commercial & Political
Losses Covered at 95%
Non – Small Business Exporter
Commercial & Political
Losses Covered at 90%
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Decision to Extend Credit Exporter submits Foreign Buyer Name to EXIM Bank
◊ If EXIM Bank approves the Foreign Buyer, then the Exporter can offer open
account (extended) payment terms secured by export credit insurance
Open Account terms
◊ If EXIM Bank does not approve the Foreign Buyer, then the Exporter can
offer secure payment terms
Cash-in-Advance
Letter of Credit
EXIM Bank can help Exporters make
credit decision on their Foreign Buyers
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Types of Policies & Target Clients
Express Insurance
• Small businesses new to exporting* with <$7,500,000 export credit sales and 10 or less buyers. Must have no more than five ears of export credit experience
Small Business Multi-Buyer
• Small business exporters* with <$7,500,000 export credit sales
Standard Multi-Buyer
• Experienced Exporters desiring to insure more than one Buyer
Single Buyer
• Any Exporter desiring to insure only one Buyer
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Registered Broker Support
Policy Application
Policy Quote
Submit Foreign Buyers Names
Shipment Reporting
Premium Payment
Claims Filing
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Country Eligibility
Country Coverage Support available in over 180 countries
Restrictions may apply for either Political or Economic reasons
Refer to the Country Limitation Schedule (CLS) at https://www.exim.gov/tools-for-exporters/country-limitation-schedule
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ECI Conclusion
EXIM Bank with the
assistance of our Registered
Insurance Brokers can provide
your company with Export
Credit Insurance policy
coverage that can reduce your
non-payment risks to enable
you to sell globally on a
competitive basis.
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Export Working Capital
Resources to Assist Exporters to
Sell Competitively Overseas
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Working Capital Guarantee Ex-Im Bank provides a 90% guarantee
to Lender to support financing to U.S.
Exporters
Lender can advance up to 75% against
Export Inventory and up to 90%
against Foreign Accounts Receivable
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Working Capital Guarantee Uses
Pay for materials, equipment, supplies, labor, and other
inputs to fulfill export orders
Post standby letters of credit serving as bid bonds,
performance bonds, or payment guarantees
Purchase finished products for export
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Working Capital Guarantee Benefits
Flexible financing for large contracts
More attractive advance rates than conventional
financing
Inclusion of otherwise excluded collateral in borrowing
base
Lower collateral requirements for bid bonds,
performance bonds, or advance payment guarantees
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Expansion of Exporter’s Borrowing Base Borrow up to $1.65 Million against
collateral of $2 Million
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Export Working Capital EXIM Bank with the assistance of our Delegated Authority Lenders and
Originators can provide your company with Export Working Capital for
your company to be able to fulfill orders of goods and services by your
Foreign Buyers.
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Foreign Buyer Financing
Resources to Assist Exporters to
Sell Competitively Overseas
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Foreign Buyer Financing
Foreign Buyer Challenges:
Access to capital is limited or not available in Foreign Buyer’s Country
Cost of borrowing capital is prohibitively high in Foreign Buyer’s Country
Repayment Period (term) for financing is not long enough in Foreign Buyer’s
country to support purchase
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Foreign Buyer Financing
Exporter Challenges:
Exporter is competing against other U.S. based companies to sell to Foreign
Buyer
Exporter is competing against Foreign based companies to sell to Foreign
Buyer
Sale to Foreign Buyer is contingent upon securing a low cost financing option
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Foreign Buyer Financing
Lender Challenges:
Appetite to extend credit in foreign markets is limited or non-existent
Country Limits and Credit Risks within organization limit supporting
transaction
Need to support Exporter to obtain a sale with a Foreign Buyer to retain
client relationship
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Foreign Buyer Financing
EXIM Bank Strategies:
Provide Lender with Loan Guarantee to induce them to lend to Foreign Buyer
Provide Lender with Insurance Policy to induce them to lend to Foreign Buyer
Provide Direct Loan to Foreign Buyer if Lenders are unwilling or unable to
lend to Foreign Buyer
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Foreign Buyer Financing
EXIM Bank Product Solutions
Short-Term – Financial Institution Buyer Credit Insurance
Medium-Term – Credit Insurance
Medium-Term – Loan Guarantee
Long-Term – Loan Guarantee
Long-Term – Direct Loan
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Foreign Buyer Financing Basics
Foreign Buyers must meet certain credit criteria, depending on the size of
the transaction, and the nature of the Buyer (private or public sector).
If the Foreign Buyer does not meet these credit standards, the use of
guarantors (Commercial Bank or Government) and other credit
enhancements may be used to qualify.
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Foreign Buyer Financing EXIM Bank with the assistance of our Delegated Authority Lenders can help to provide your
Foreign Buyer with financing to allow them to purchase your goods and services so that you can
successfully compete in Foreign Markets.
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EXIM Due Diligence Resources
Trade Reference Form
http://www.exim.gov/sites/default/files//forms/eib99-14.pdf
Sources of Credit Information Fact Sheet
http://www.exim.gov/sites/default/files//forms/inst-12-009.pdf
Short-Term Credit Standards
http://www.exim.gov/sites/default/files/STCS-June-2013.pdf
Country Limitation Schedule (CLS)
http://www.exim.gov/tools-for-exporters/country-limitation-schedule
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EXIM Bank Resources
Export Expertise: 10 Finance Tools to Grow Your Export
Business (eBook)
http://www.exim.gov/sites/default/files//managed-documents/EXIM_White-
Paper_10-Ways-EXIM-Assists-Small-Business-Whitepaper-FINAL.pdf
Guide to Export Credit Insurance (eBook)
http://www.exim.gov/sites/default/files//managed-documents/Ebook-ECI-
With%20Case%20Study-Final%20March%202015.pdf
How it Works: Ex-Im Bank Export Credit Insurance (Video)
http://www.exim.gov/learning-resources/video-gallery/how-it-works-ex-im-bank-
export-credit-insurance
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EXIM Bank Resources
An Exporters Guide to Working Capital Loan Guarantees
(eBook)
http://www.exim.gov/sites/default/files//managed-documents/WCLG-
eBook%20V9-FINAL.pdf
How it Works: Ex-Im Bank Working Capital Loan Guarantee
(Video)
http://www.exim.gov/learning-resources/video-gallery/how-it-works-ex-im-bank-
working-capital-loan-guarantee
International Trade Adminstration – Trade Finance Guide: A
Quick Reference for U.S. Exporters (ebook)
http://grow.exim.gov/hs-fs/hub/421983/file-2055772500-pdf/Guides/trade-guide.pdf
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EXIM Bank Resources U.S. Department of Commerce / United States Commercial
Service – A Basic Guide to Exporting (eBook)
http://grow.exim.gov/hubfs/ebook/basic-guide-to-
exporting_Latest_eg_main_086196.pdf?t=1495810470077
U.S. Department of Commerce / United States Commercial
Service – How to Export Video Series – "Get Paid and Finance
Your Export Transactions" Video Set
Methods of Payment | Exporting Basics – Video Episode 14
https://www.youtube.com/watch?v=4yN8BV-GuZ4
Financing Export Transactions | Exporting Basics – Video Episode 15
https://www.youtube.com/watch?v=4xjP14v3OEA
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Conclusion: Secret to Export Success
“Exporting Takes Teamwork to
Succeed” – John Brislin
“Teamwork is the Fuel that allows
Common People to attain
Uncommon Results” – Andrew
Carnegie
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©2016 Export-Import Bank of the United States
www.exim.gov
1-800-565-3946 (EXIM)
Your EXIM Bank Contact: John Brislin Regional Director Seattle Regional Export Finance Center Cell: (206) 307-5289 Email: [email protected]
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