Wyoming Business Tips for July 9

A weekly look at Wyoming business questions from the Wyoming Small Business Development Center (WSBDC), part of WyomingEntrepreneur.Biz, a collection of business assistance programs at the University of Wyoming.

By John Privette, WSBDC Network regional director

“I am evaluating credit terms with my foreign buyer. How can I protect against nonpayment?” Robert, Casper

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 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.

In addition to mitigating the risk of nonpayment 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.

Another and perhaps most surprising reason to leverage export credit insurance: It is 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.

Three compelling reasons to explore export credit insurance are:

-- Offer credit terms that are good for you and good for your foreign buyer while protecting your receivables against nonpayment.

-- Enhance your borrowing relationship with your bank.

-- Leverage a powerful marketing tool for competitive advantage.

For more information about EXIM Bank financial solutions, call Privette at the WSBDC Network at (307) 772-7371 or email jprivett@uwyo.edu. The source for this column was obtained from EXIM Bank.

A blog version of this article and an opportunity to post comments are available at www.wyomingsbdc.org/blog1/.

For more information, call the WSBDC Network Procurement Technical Assistance Center at (307) 772-7372 or email amlewis@uwyo.edu.

The WSBDC is a partnership of the U.S. Small Business Administration, the Wyoming Business Council and the University of Wyoming. To ask a question, call 1-800-348-5194, email wsbdc@uwyo.edu, or write 1000 E. University Ave., Dept. 3922, Laramie, WY, 82071-3922.