ILMA Compoundings - July 2019 - 27

To get to know more about their buyers' finances, exporters could create a credit questionnaire or ask for references
from other U.S. companies that have sold to them. "Knowing them from a credit point of view is very important, and
it is a prudent business practice," Koenig said.
EXIM also offers pre-export financing with a working
capital guarantee program. "That is a guarantee that we offer
to a commercial bank that makes a loan to an exporter to
either purchase or produce U.S. products and/or services for
export," Koenig said.
Working capital is a vital issue because exporters may get
orders from overseas and need money to make that product
or purchase that product to be exported. "We protect the
lenders against the exporters' default of the loans, so it
enables the lender to make a loan where it may not have
made one," Koenig said.
The guarantee can also cover performance bonds. "If a
company is a manufacturer, the buyer might say, 'I need you
to post a performance bond, and I want to make sure you're
meeting all of the milestones you say you're going to meet,'"
Koenig said.
EXIM can also support exporters with the sale of capital
equipment with medium-term buyer credit. "Many exporters are not able to carry a receivable when they have a buyer
that wants two years to pay for it. We have a medium-term
product that is usually bank-driven," Koenig explained. "We
help exporters access their own bank or find a bank that will
make a loan to a creditworthy foreign buyer."
For the exporter, it means that once the piece of equipment ships, the bank can cash them out at 100%. The
buyer gets multiyear financing at U.S. interest rates, and the
U.S. lender gets an EXIM bank guarantee in case the buyer
defaults on that loan.
In terms of fees on working capital, the interest rate on
that loan is negotiated between the exporter and the lender.

"The lender is our customer because they're coming to us for
a guarantee," Koenig said. "We have a guarantee fee, up to a
$2 million loan, of 1.75%. Our fee is to the lender, so they
may or may not pass that off to the exporter."
Costs for EXIM's services vary. On the credit insurance,
there are two types of short-term insurance. The first type is a
multi-buyer policy. For that type of private-sector policy with
a credit term of up to 60 days on an open account, no matter
what country it is, as long as EXIM can service that country,
the rate is 65 cents per hundred of the gross invoice value.
"If an exporter has a $25,000 invoice, that coverage under
the express policy is going to cost $162.50 for 95% coverage
with no deductible," Koenig explained. "The exporter only
pays a premium on what they ship when they ship." EXIM
also has a single-buyer policy, and those rates are published
on exim.gov.

Understanding Cultural Differences

Holly Alfano, CEO of ILMA, said that recognizing and
understanding cultural differences can go a long way when
forming lasting relationships.
Allegheny Petroleum operates in Jamaica, and Jim Kudis
said he has seen significant cultural differences between that
country and the U.S. "We seem to be faster to get to the
point and move on to the next thing. Jamaican culture is
based more on friendships and relationships," he said. "Both
approaches are helpful. It's a matter of understanding and
leveraging the nuances of each other's cultures."
To help ILMA members better understand important
cultural nuances, ILMA will present a session on the topic
during its 2019 Annual Meeting, Sept. 21-24 at The Broadmoor in Colorado Springs, Colorado.

Maximizing Resources

Koenig suggested that ILMA members involved in global
operations reach out to EXIM's regional office staff to
discuss what their export challenges are. "Many of us have
been with EXIM a long time and in this industry a long
time, so we are very good resources for the members. If they
need something EXIM doesn't directly provide, we can help
them identify where to go," she said.
Trade specialists can help exporters learn about how
ILMA's members do their export business and how to craft
the right policy that is going to help them the most, Koenig
said. "We don't want them to feel like we're pointing them
to a webpage, and they have to go figure it out," she said.
"We want them to know there is a live person at the other
end of the phone, and we are eager to help them."
Long is a freelance writer and journalist. She can be reached at
925-750-7163 or mindy@mindylong.com.

http://www.exim.gov

ILMA Compoundings - July 2019

Table of Contents for the Digital Edition of ILMA Compoundings - July 2019