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Professionnel Documents
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What it is Not
A means to make a bad credit good Primary source of repayment
Collection Services
Factoring
Types of Coverage
Commercial Risks
Buyer goes bankrupt Death Default of payment for any reason other than product dispute
Catagories of Insurers
Public Underwriters Private Underwriters
Public Underwriters
Export-Import Bank of the United States
Defined programs and costs Subject to US Government policies Small business policies Short term, medium term, long term Single buyer or multi-buyer Pay as you go to improve cash flow
Underwriting Philosophies
Exporter
Length of time in business Financial information Credit approval experience Losses
Underwriting Buyers
Trade References Credit reports
D&B International Coface Graydon
Financial information
Private Underwriters
Less stringent underwriting of exporter Greater exporter responsibility for credit evaluation of buyer Deficient exporter credit files may result in refusal of claim payment Minimum premium payable up front Lower rates but greater possibility of purchasing unnecessary coverage
Policy Limit
$1 mil
$2 mil
$3 mil
$1.5 mil
Indemnity
Annual Deductible Discretionary Credit Limit -DCL Premium Rate Estimated Premium on sales of $6 Mil
90%
$0 $20,000 .55% $33,000
90%
$50,000 $150,000 .50% $30,000
90%
$0 $0 .49% $29,400
95%
$40,000 $100,000 .45% $27,000
Policy Assignment
Benefits of policy can be assigned to a bank or lending institution Immediate availability of funds Pass cost of funds to importer Claims will be paid directly to the lender
Final Word
Every asset on a balance sheet is insured
Sale to Mexico
Sale EXW SHIPPING $100,000 $5000.00
DAF(LARADO) $105,000 TERMS: SHIP 60 DAYS FROM REC OF IRR COMF LETTER OF CREDIT.
BUYERS VIEW
LOC $105,000 BANK FEE 5% $5,250 SUBTOTAL $110,250 COST OF $$ * $3,325 LANDED COST $113,575
*I=prt. $105x19%/12x2
LOC PRICE
$113,575