"If people are not exporting today, they are really missing the boat,” says Sharyn Koenig, senior business development officer at the Export-Import Bank of the United States.
In today’s global economy exporting helps businesses open new markets and expand sales. It’s such an important part of the new business strategy that American businesses are now sending an estimated $7.7 billion worth of products and services overseas every year.
The challenge, according to Koenig, is knowing how to manage the credit lines and be assured you will get paid when you send something to a customer in another country.
To help small and large businesses, the Export-Import Bank of the United States (Ex-Im Bank) provides credit insurance and other services that help businesses of all sizes compete in a global economy.
Koenig will present “An Exporter Workshop: Ex-Im Bank Update” on Friday, December 5, at 10 a.m at Monmouth University. Cost: $40. For more information call 732-571-3636 or E-mail firstname.lastname@example.org.
“Our goal is to help people learn what’s involved with exporting,” Koenig says. “We can help them sell U.S.- made products and services. It’s really important today because for many small businesses, our domestic markets are either saturated or close to being saturated. You really need to look overseas to grow a business. The dollar is low right now, making this a great opportunity.”
The Ex-Im Bank is the government’s official export credit agency, started in 1934 to help finance the export of U.S. goods and services to international markets. It helps companies large and small generate sales in foreign markets, to maintain and create U.S. jobs, and to contribute to a stronger national economy.
Small business owners attending the workshop will see how they can use the Ex-Im Bank, often in partnership with their own local bank, to build new revenue streams or increase existing ones. They will also learn about working capital guarantees and export credit insurance.
All of these things help owners minimize risk, says Koenig, who has 27 years experience in the import/export business.
Business owners thinking about exporting will learn about using credit insurance to get paid when you send products and invoices to another country, turning credit insurance into a marketing tool, and improving your financing picture.
“Some people don’t export what they create,” Koenig says. “The reason is mostly that they have a fear of the unknown.”
Exporting involves rules and regulations. There are documentation issues and licensing to worry about. So some people would rather forget about the option. But they need to know there is help out there to let them take advantage of the global market, she says.
Despite its name, the Ex-Im Bank is not a bank. Rather, it is a self-funding, independent federal government agency with eight regional offices that provides export financing, including credit insurance and working capital guarantees. Koenig works in the New York City office, supporting small businesses between New Jersey and North Carolina.
Insurance. “The credit insurance provides risk protection against nonpayment,” says Koenig. “It’s a huge benefit for small businesses because part of the fear associated with exporting is the question ‘Will I get paid?’ The insurance addresses that issue. Working with the Ex-Im Bank, any small business can insure its receivables, regardless of the dollar value of the order or the frequency of its exporting shipments. The insurance covers 95 percent of the invoice and there is no deductible.
“We have a multi-buyer policy for small businesses so they can use one policy to protect themselves with any number of companies they may sell to in other countries,” Koenig says. “The cost is only 55 cents per $100 of the gross invoice value. That means if you sell $25,000 worth of goods to a company in Europe, for example, you only pay $137.50 for 95 percent coverage and zero deductible.”
The Federal government makes this kind of insurance available to the smallest of businesses to help owners compete globally and create new sales opportunities. Most business owners would agree that it’s a small price to pay to ensure you collect on your receivables, especially the first time you export your products or services.
Credit as marketing. “Often, exporters want cash up front or they require the foreign buyer to provide a letter of credit,” Koenig says. “At the same time, the buyer often wants credit terms. For a small business owner to be competitive, she has to offer open accounts. The challenge is knowing how.”
With credit insurance, the business is protected from nonpayment for political or commercial reasons. By taking away the risk, the federal government makes it easier for people to market their products.
Small businesses get a similar benefit when they use the insurance to help acquire financing, especially in today’s difficult credit market.
Normally, getting financing when selling overseas is more challenging because most banks exclude foreign receivables from a business’s asset base when evaluating the exporter.
“As far as a bank is concerned, those receivables are a dead asset,” said Koenig. “Because of the potential risk, they won’t look at that money when evaluating your request for financing.”
However, when you have credit insurance protecting those receivables, banks will consider the asset. For some companies, this can make a substantial difference in their stability and overall financial picture.
She cites a long-term customer in Delaware who exports industrial parts. “He calls this sleep insurance,” she says. “He sleeps at night because he’s protected.”
Koenig has been working with exporters and importers since 1992, giving her a wealth of experience. Before getting into the field she worked at Blue Cross in a management role, handling policy administration. It’s not that she was particularly looking for work in the insurance field, but it was something she knew through her mother, who worked at Blue Cross for many years.
After graduating from Trenton State College she went to work at Blue Cross herself. “Back then the company looked very favorably upon hiring family members. It became a very good opportunity for me,” she says.
Since then she has come across many situations where she has found career growth through helping others. And that will be an underlying theme of the Ex-Im Bank workshop. “I get to see what happens when people understand what the government offers to help them grow their small businesses.”