Export-Import Bank Can Take The Uncertainty Out Of International Business Dealings

Maine is famous for delicious lobsters, and people all over the world crave these crustaceans. With such high demand, exporting is a great way to expand a business by increasing market size, providing the opportunity to sell to more buyers, and handle any oversupply as well. Plus, international buyers are often willing to pay more per pound than domestic consumers. While many business owners are interested in the opportunities offered by exporting, one common question arises: How do I know that I will get paid by these international buyers? Getting paid is the primary concern of U.S. companies that are selling goods and services beyond our borders. If they don’t pay, there is very little recourse for the seller, and the financial hit can be significant. Consequently, many small businesses are wary of wading into international waters.

Another obstacle to exporting is the need to offer open account credit terms for international payment. The extension of credit terms is extremely common outside of the United States. Buyers expect them and requiring a foreign buyer to pay cash in advance can jeopardize foreign sales. Thus, Maine lobster dealers who are unable to extend credit may lose out on valuable opportunities. There is an excellent solution to these two payment concerns: the Export-Import Bank of the United States (EXIM). EXIM, a U.S. federal government agency, empowers U.S. companies to compete and win more international sales. With demand for Maine lobsters expanding, EXIM is here to make sure they can appear on tables around the world. EXIM export credit insurance is an insurance policy that covers foreign accounts receivable generated by the sale of goods and services from U.S.-based companies to international customers. The insurance covers up to 95 percent of the sales invoice against nonpayment due to commercial (e.g., bankruptcy, protracted default) and political (e.g. war, insurgency) risks. It is designed to take the worry out of exporting so companies can enter new markets and boost sales with confidence.

Thousands of U.S. businesses benefit from EXIM’s programs for selling their products and services internationally, including Maine lobster companies. Maine companies exported more than $22 million of lobsters with EXIM support, capturing the business by offering open account credit terms (e.g., 30 or 60 days), which made them more competitive in the marketplace. The accounts receivable generated by these international sales were covered by EXIM’s export credit insurance, mitigating the risk of nonpayment by their foreign buyers. Having an EXIM’s export credit insurance policy can also expand a company’s borrowing power, providing additional liquidity. For lobstermen or dealers with cash flow constraints, as well as those who need funds for boat repairs, this is extremely helpful. The lender adds the insured foreign receivables to the company’s borrowing base. You can learn more about how EXIM helps companies of all sizes boost sales while protecting financial assets. Visit www.exim.gov or email ExportHelp@exim.gov to get started today.