In our last blog, we spoke about what medium term insurance is. This week we will discuss how medium term insurance can benefit you and why you should use it.
It is known that about 95% of the world’s population is outside of the United States, so when companies look to expand and grow their revenue it is natural to look to international markets for buyers. When foreign buyers purchase products and seek local financing, the lending environment is much different than in the U.S. The cost of capital in emerging economies is often significantly higher than it is in the US market. The ability to offer U.S. dollar priced financing to a foreign buyer can benefit both buyer and seller as it enables them to make the sale and offer their customers a way to pay for it.
Why You Should Use It
Manufacturing companies can use medium term financing to increase sales and profitability. Offering a buyer a long term payment option for a project may also entice them to buy more than they would be able to if they were paying in cash. In many cases, a medium term financing offer levels the playing field and allows the seller to compete on quality and not just price.
For manufacturers that do not want to wait to get their money over the five year term of the loan, there are options to accelerate their cash flow. If they are offering the credit directly to their customer, they can then sell the insured loan to a lender and get paid cash upon delivery of the equipment. In larger contracts, a lender can be identified to arrange buyer financing where the bank gives their foreign buyer five year financing terms and pays the seller cash upon delivery.
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About Impello Global
Impello Global is a US based trade finance advisory boutique and trade credit and political risk insurance brokerage. We specialize in trade credit and political risk insurance and provide advisory services to companies and lenders who are looking to expand their trade finance capabilities.
If you are a company or a lender trying to better understand trade credit insurance or EXIM Bank programs and looking for guidance about how these programs can help improve working capital or medium term financing, our team would be delighted to learn more about your business and discuss options available to you. Please visit our website at www.impelloglobal.com or contact us directly at info@impelloglobal.com.