Most credit professionals are well aware of NACM’s vaunted “Five C’s of Credit:” (character, capacity, capital, conditions, and collateral). These guiding tenants have long provided a base-level guide to drive credit professionals toward best practices in their daily business dealings. A group of veteran credit professionals, while attending NACM’s Graduate School of Credit and Financial Management, argued that differences in doing business outside of U.S. borders perhaps necessitates adding three additional C’s to the list for anyone extending credit internationally. They are: country, currency, and culture.

Country
Where a U.S. business exports its goods is a major factor in how smoothly credit and collections transactions can be conducted. Depending on the country in question, credit and collections professionals can run into a myriad of business problems: regime instability and citizen uprisings (the Middle East, Ukraine), sanctions lists that ban certain sales and fine those who don’t comply (Iran, North Korea), high public corruption levels (Russia, Sub-Saharan Africa), laws that are considered highly debtor-friendly (Brazil), to name a few.… Read the rest

By David Josephson at Export-Import Bank of the U.S.

Why should a small bank with a focus on its local customers and deposits care about including export finance in their offerings to customers? The answer is quite simple: more and more, their customers who are manufacturers or service providers are going global in order to boost their sales, and the more that a local bank knows about export finance, the more valuable that bank is to its customers.

The Export-Import Bank of the U.S. (Ex-Im), America’s official export credit agency, exists to support U.S. job growth by equipping businesses with export financing tools in instances when private banks are unable or unwilling to offer support. More than 98 percent of Ex-Im’s transactions last year involved partnering with a private financial institution to support export sales; all told, Ex-Im supported 164,000 American jobs by supplying products like insurance, working capital, and loan guarantees to its customers—90 percent of which were U.S.… Read the rest

With the amount of fraud and terrorist group activity, U.S. government regulators as well as those from other established economies are watching more closely than ever for illegal activity. Businesses involved in global trade can easily get wrapped up in such activity, and it’s often by accident or for not taking that extra step of due diligence when a red flag arises. Most familiar with government agencies and regulators strongly believe that perfection is not the expectation, but honest and intentional effort and due diligence is. Perhaps the most profitable action is avoiding the mistake andthe regulatory ire that comes with the wrong business dealings. In short, know what not to do. The following are some mistakes to avoid:

Failure to Know Popular Transshipping Countries
Businesses or individuals in virtually any country can do transshipping, or reshipping, by posing as an end user who will then flip the goods, especially those with security sensitivity or with a military use, to buyers in nations where such exporting activities are banned.… Read the rest