Teaser: Dwight Winkler on the Global Sales Mentor Podcast

5 Jul 2021 · 1 min

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1:09

Dwight Winkler explains how exporters can ship goods without a letter of credit by getting buyer credit instead. His organization checks the buyer's financial statements and creditworthiness, then sets a credit limit, sometimes up to 180 days of payment terms.

Talk to me about what you offer me. I come in and I say, here's the deal. I can't get an LC out of this customer, but my, my company isn't going to let me ship without payment. What do you do for me?
Okay. So as being part of an organization that can provide financing in these cases, we would come in and we would look at, okay, who is the buyer? And we would go and do a due diligence on that buyer's creditworthiness. Through financial statements, through other credit sources. And then we would determine, okay, we can approve and provide this buyer a certain amount of credit up to, let's just say, 180 days.
Right.
Okay. Behind that, we can back that up behind the scenes with some trade credit insurance where let's say 90% of the commercial risk is covered through the insurance. There's a 10% residual that the exporter might have to retain in case of— in the event of a default. When it comes to political risk, typically these are 95% or more covered in the event of some political reason that payment can't be made. So that underwrites the deal.