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SHORT-TERM TRANSACTIONS

Short-term transactions are those, generally, with payment terms of less than 180 days. The exporter can choose from several financing tools for this type of transaction, ranging from cash in advance to open account. All of these fall within the spectrum below with increasing risk to the exporter and decreasing risk to the foreign buyer as the type of financing used moves to the right.

Risk of short-term transactions varies for the exporter and foreign buyer

The export credit services provided by the experienced staff at Export Assist help you to minimize your risk, maximize your cash flow and free yourself from documentation hassles so you can receive payment more quickly and spend more time on your core business activities.

Export Assist has specifically designed export finance systems to manage your export receivables by maintaining database information regarding the exporter’s credit decision on each buyer, continuously updating buyer credit limits versus invoice activity, notice of due dates and critical reminders issued on past due invoices. Numerous reports can be generated in order to fulfill unique compliance requirements by the credit insurance carrier and the lending institution which may be loaning against the export receivables.

In addition to management, our export finance system is integrated to provide the ability to track international credit insurance, such as multibuyer policies, and monitor financing received in conjunction with your export receivables. It can also manage, monitor and report on any international factoring organization’s factoring guarantee for compliance and financing.

Online Export Letters of Credit Top of Page
An export Letter of Credit (L/C) is used to assure the exporter that payment will be made once the goods have been shipped to the foreign buyer in accordance with the terms of the L/C, and the shipping and transaction documents have been accepted by the issuing bank. The L/C replaces the exporter's credit risk with that of the issuing bank.

Export Assist is the premiere processor of Online Export Letters of Credit. The high level of expertise offered by our Letters of Credit staff assures you of consistent and professional service. Plus, our secure, web-based L/C management system enables us to process and track your complex documents expeditiously and correctly the first time, thereby eliminating delays that cost exporters around the world hundreds of millions of dollars each year.

Whether Export Assist is handling a single L/C transaction or your entire L/C portfolio, you will be able to access your most current, confidential information on our secure website at any time and at any internet location around the world.

For a detailed description of our leading edge online service and how it can benefit you, please click here.

Online Documentary Collection Top of Page
When you ship to a foreign buyer using documentary collection, Export Assist will prepare the sight or time draft (or bill of exchange) on the buyer, demanding payment for the documents covering the goods shipped. We then send the draft, relevant shipping documents, and document instructions to the exporter’s bank which in turn forwards them to a corresponding bank in the buyer’s country to initiate payment. Export Assist will track these documents and notify you when payment is made. Our online web-enabled system and experienced staff enable us to expedite the process so that you can receive the payment more quickly.

Although riskier than Letters of Credit, documentary collection has the security of the buyer having acknowledged delivery of the goods and his obligation to pay by signing the bank draft or banker’s acceptance. Export Assist and the bank are not principals in the transaction nor do we assume responsibility to insure payment. Since you are relying solely on the foreign buyer for payment, we highly recommend that you know the credit strength and reputation of the buyer before using this financing tool.

Open AccountTop of Page
With open account, Export Assist acts as your accounts receivable department to manage your export credit and collections. When you ship the completed order, we will, on your behalf, prepare and send the invoice to the buyer requesting payment as per terms, usually 60 to 90 days. We will also help to oversee the extension of credit limits and the management of customer receivables.

This type of financing is not uncommon between exporters and buyers who know each other and who renew their relationship periodically at trade shows and industry conferences. It is also frequently used between sister corporations or a joint venture entity which becomes the buyer.

We do not recommend that open account be used when you have little or no knowledge of the buyer since it offers the highest risk to the exporter. If the buyer does not pay as agreed, the collection process across international borders is quite difficult and the opportunity for any recourse is extremely small. The small- to medium-sized exporter cannot afford to absorb the consequence of getting paid late or not at all.

If open account is used, we suggest that some sort of protection, such as international credit insurance or a factoring guarantee, be used to provide you with additional collateral.

Insured Accounts Receivable Top of Page
Whenever your export finance transaction becomes an accounts receivable, Export Assist recommends looking at credit enhancing it with international credit insurance to insure its payment by transferring its risk to an insurance underwriter.

International Credit Insurance
International credit insurance allows the exporter to ship on a documentary collection or open account basis using a regular invoice, rather than requiring the buyer to tie up his credit line by either opening a Letter of Credit or paying cash in advance. At the same time, international credit insurance offers you the following benefits:

  • Marketing Tool - enables you to extend attractive credit terms to creditworthy foreign buyers in an effort to increase sales or open new markets.
  • Financing Aid - by insuring international receivables, you can arrange attractive financing with commercial lenders who take an assignment of the credit insurance policies and use the receivables as collateral for loans.
  • Risk Mitigation - protects you against non-payment by the buyer due to both commercial and/or political perils.

Export Assist will help you obtain international credit insurance, either through several large private insurance companies located here and abroad, or through The Export-Import Bank of the United States (Ex-Im Bank).

Factoring Guarantees Top of Page
Factoring may increase an exporter’s competitiveness by allowing shipment on open account while providing guarantee of payment at time of shipment or when the receivables are due.  It can also enable the exporter to borrow funds more easily by adding a layer of comfort for the lender.

Export Assist will work with the exporter to obtain international factoring guarantees from international factoring organizations in Europe that operate worlwide.

 

 
   
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