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Shipping product or payments abroad can be a daunting proposition for first time Oklahoma exporters. Even established business relationships can face challenges when doing business from a distance should an international partner file for bankruptcy, run low on cash or fail to pay an invoice. Concerns about resolving these issues keep many Oklahoma exporters from exploring options outside the U.S., but there are resources to ensure that risks businesses take are covered should the worst happen.

Below are three options for insurance that help protect the investment that Oklahoma exporters make when doing business abroad.*

 

meridian-logoMeridian Finance Group – Over the past 20 years Meridian Finance Group has helped hundreds of companies increase their sales using accounts receivable insurance. All policies brokered by Meridian are backed by top-rated credit insurance companies. We offer policies from every underwriter, enabling us to quote the most competitive terms and premium rates in the market. More significant than Meridian’s ability to place coverage is the comprehensive support we provide to our customers.

 

 

 

EHEuler Hermes – Boasting itself as the world’s leading provider of trade credit insurance, Euler Hermes provides the insight and resources you need to manage, maximize and protect your receivables. When you initiate a business credit insurance policy, their experts analyze your customers’ creditworthiness and financial stability. We then assign them specific credit limits; these are the amounts we will indemnify if those insured customers fail to pay. Our underwriters are industry specialists who will work closely with you to deliver in-depth credit analysis and ongoing account monitoring to provide early warning of potential credit risks before they become a loss.

 

 

EXIMThe Export-Import Bank of the United States – If you’re a tax payer, you’re already invested! The EXIM Bank’s Export Credit Insurance empowers American exporters to safely offer competitive open account terms to international customers, while protecting against nonpayment. They offer policies featuring free credit analysis of foreign buyers, streamlined processing and no up-front costs: no advance premium, no first-loss deductible—nothing owed pre-shipment. You pay only for what you ship, after you ship it.

 

 

 

* The Oklahoma Governor’s International Team does not endorse the services of the above organizations.
(Photo credit to  Stan Shebs.

Chuck Mills.

Chuck Mills.

As the deadline for renewal of the Export-Import Bank of the United States’ charter approaches at the end of June, some congressional representatives promise they’ll allow the vital American economic tool’s existence to lapse.

In an article by Andrew Taylor of the Associated Press, House Financial Services Committee Chairman Jeb Hensarling said he wants the bank’s charter to expire without a vote and said that “the momentum is in our favor.”

“This is going to be a critical vote, or hopefully a non-vote, on the future of the Republican Party and the future of our economy,” Hensarling said.

Despite pleas from House Speaker Jon Boehner that such a move would risk thousands of American manufacturing jobs for workers whose products are shipped abroad and guaranteed through the EXIM Bank’s export credit insurance, it appears Representative Hensarling’s move to kill the vital government program may succeed.

The OKGIT’s Chuck Mills, who is also the 2014-2015 Chairman of the Oklahoma Chamber of Commerce and a third generation small business owner and exporter, penned an op-ed in the Tulsa World countering claims that the EXIM Bank is government subsidized corporate welfare and a burden on Oklahoma’s small businesses.

According to Mills, “the bank is a government agency that has, in fact, returned $7 billion to the government since 1992, while enabling businesses like ours to enter to new markets through the safety net provided by the bank’s export credit insurance offerings.”

Randy Kellogg

Randy Kellogg

He also touched on the repercussions should the bank’s charter not be renewed, writing “Three generations of my family have been manufacturing quality earth drilling products worldwide for a range of drilling types, right here in Shawnee. We sell drill bits, augers, and other equipment overseas, with exports now accounting for about 20 percent of our business. The export-import bank enabled us to cultivate many of these overseas opportunities — which would ultimately be jeopardized if the bank lost its charter, along with our 20 employees.

“In the Sooner State alone, since 2007, over 115 businesses received export-import bank financing that supported over 7,000 jobs. Losing that financing and the bank’s credit insurance offerings would deliver a harsh blow to businesses throughout the state.”

The OKGIT’s Randy Kellogg, an approved lender with many years of experience in assisting Oklahoma firms do business with EXIM, also spoke in favor of the charter’s renewal at the group’s March 2015 meeting.

“Export-Import helps keep a level playing field for Oklahoma companies on international markets…it doesn’t help finance foreign governments as some critics suggest or only benefit big companies. Its financing helps smaller manufacturers who are indirect exporters when they supply firms like Boeing Company…”

Sawyer Manufacturing Co.

Sawyer Manufacturing Co.

The most obvious success story of EXIM’s support on Oklahoma-based businesses is Sawyer Manufacturing, which was just named the Small Business Administration’s National Exporter of the Year.

In an EXIM feature on the Tulsa-based small business‘ use of the banks financing, Sawyer Manufacturing’s Vice-President Dave Hembree said  that “the ability to extend credit on international sales allows us to grow our business in existing international markets and export our products to new countries by giving our international distributors more flexibility to invest and market our products. Credit terms provided to our international distributors in these markets allow them to better compete, so it makes our U.S. made products more competitive in the international markets.

As the June 30, 2015 deadline approaches for the U.S. Congress to reauthorize the charter of the Export-Import Bank of the United States, Oklahoma businesses face an uncertain future as some in Congress balk at it’s continuation.

On April 15, EXIM President Fred Hochberg was grilled by some members of the House Financial Services Committee skeptical of his leadership and the bank’s mission in providing funding for American exporters. Critics of the bank accuse its mission of being little more than taxpayer-funded corporate welfare for large multinationals. Another point of contention by Congressional critics is that the U.S. Treasury Department officials have not negotiated with foreign governments to end subsidized exporting, a mandate in a 2012 re-authorization bill by Congress.

In Oklahoma, public support for fiscally conservative policies for taxpayer funded organizations like EXIM can run in contrast to the positives international exporting can have on local, small businesses. The bank helps underwrite loans for American products sold abroad, meaning Oklahoman exporting companies can acquire a guarantee for their investments in personnel and infrastructure.

According to EXIM:

  • Oklahoma has 125 exporters whose total export value is $1 billion.
  • Of that $1 billion, $804 million is insured or financed through the bank.
  • The state’s top three export destinations are Mexico, Columbia and Australia.

In an EXIM feature on an Oklahoma Success Story, Tulsa, Okla.-based Sawyer Manufacturing Co. Vice-President Dave Hembree explains the bank’s impact on his firm’s business.

The ability to extend credit on international sales allows us to grow our business in existing international markets and export our products to new countries by giving our international distributors more flexibility to invest and market our products. Credit terms provided to our international distributors in these markets allow them to better compete, so it makes our U.S. made products more competitive in the international markets.

Sawyer Manufacturing Co. also credits these financial assurances for its expanded business in Africa, Russia, Australia and the Middle East and the creation of 10 new jobs.

At the March 24, 2015 OKGIT meeting, group member and F&M Bank’s Randy Kellogg provided his take on the importance of the Export-Import Bank to Oklahoma companies.

“Export-Import helps keep a level playing field for Oklahoma companies on international markets…it doesn’t help finance foreign governments as some critics suggest or only benefit big companies. Its financing helps smaller manufacturers who are indirect exporters when they supply firms like Boeing Company…”