How To Get Paid Internationally

BizFair 2018

Renton – September 2018

John Brislin – Regional Director – Seattle Regional Export Finance Center – EXIM Bank

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

EXM Bank – Strategic Partners

Loans •Delegated Authority Lenders

Policies •Registered Insurance Brokers

Outreach

•Regional Export Promotion Program Participants

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.

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

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

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

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

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

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

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

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

Export Credit Insurance

Resources to Assist Exporters to

Sell Competitively Overseas

Export Credit Insurance

Insurance against non-payment of

foreign accounts receivable

NOT a means to make bad credit

good

NOT primary source of

repayment

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

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.

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

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

Percentage of Risks Covered

Small Business Exporter

Commercial & Political

Losses Covered at 95%

Non – Small Business Exporter

Commercial & Political

Losses Covered at 90%

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

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

Registered Broker Support

Policy Application

Policy Quote

Submit Foreign Buyers Names

Shipment Reporting

Premium Payment

Claims Filing

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

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.

Export Working Capital

Resources to Assist Exporters to

Sell Competitively Overseas

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

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

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

Expansion of Exporter’s Borrowing Base Borrow up to $1.65 Million against

collateral of $2 Million

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.

Foreign Buyer Financing

Resources to Assist Exporters to

Sell Competitively Overseas

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

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

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

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

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

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.

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.

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

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

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

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

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

©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: john.brislin@exim.gov

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