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How to Mitigate Risks When Doing Business in the United States
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Transcript of How to Mitigate Risks When Doing Business in the United States
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How to Mitigate RisksWhen Doing Business in the
United StatesMay 20, 2009
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Export Development Canada (EDC) is Canada’s
export credit agency, offering innovative financing,
insurance and risk management solutions to help
Canadian exporters and investors expand their
international business.
Corporate Information
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At EDC our mandate – to support and develop,
directly or indirectly, Canada’s export trade and
Canadian capacity to engage in that trade, as well as
to respond to international business opportunities –
guides everything we do.
Corporate Mandate
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EDC Financial Solutions
1. Credit Insurance
2. Contract Insurance & Bonding
3. Financing
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Source: EDC Data 2003
$7.0$12.6
$7.1
$51.0
$0
$10
$20
$30
$40
$50
CIB FIN PRI ARI
Source: EDC Data 20067 – Business Review
13%
15%
7%
65%
Volume by Program
$ = Billions
66Source: EDC 2007 annual report
EDC International Volume (billion)
Europe8.0910%
Asia/Pacific8.8911%
Africa/Mid East5.637%
South Central America
5.097%North America &
Carribean49.82765%
77Source: EDC Data 2007
Customers Served by Market Sector Team
727966
2209
1136981
436
0
500
1000
1500
2000
2500
TRN RES LTM INF ICT EXT
Legend
TRN – TransportationRES – ResourcesLTM – Light ManufacturingINF – Infrastructure & EnvironmentICT – Information and Communication TechnologiesEXT - Extractive
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Credit Insurance
1. Accounts Receivable Insurance (ARI)
2. Contract Frustration Insurance (CFI)
3. Single Buyer Insurance
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• Protect against losses when your U.S. buyer can’t or won’t pay with 90% coverage
• Enter new markets and expand existing ones
• Offer your customers more flexible payment terms – up to 180 days
• Increase your access to working capital with your financial institution
www.edc.ca/insurance
Accounts Receivable Insurance
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Contract Frustration Insurance (CFI)
• Single contract insurance that provides work-in-process and receivables protection
• Covers up to 90% of eligible losses arising from a wide range of commercial risks.
• CFI is targeted specifically to Canadian exporters of capital goods or services and their Canadian suppliers
• Available on a fully selective basis, provided the associated risks and Canadian benefits are acceptable
CFI is a single contract alternative to EDC’s Accounts Receivables Insurance policy.
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Single Buyer Insurance
• Alternatively you can consider covering your sales to only one customer with our Single Buyer Insurance
• Cover an unlimited number of payments due by the same customer, up to $250,000, in a six-month period
• Policy insures up to 90% of your losses if you don’t get paid after your goods have been accepted by the buyer
• Targeted to the occasional exporter who have infrequent insurance needs (one or two exports a year)
• Simplified application process and policy to make it quick and simple to use
www.edc.ca/singlebuyer.
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Promptly determine your buyer’s credit profile with: 1) EDC Opinion Reports
● Obtain key credit and financial information on U.S. or foreign companies as well as an opinion as to whether the company is insurable
2) Dun & Bradstreet Information Reports● Fast and easy access to detailed credit
information reports on foreign companies.
EXPORT Check
Helps you decide how much (if any) credit you might want to extend to a potential U.S. or foreign customer.
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Contract Insurance & Bonding (CIB)
www.edc.ca/insurance
www.edc.ca/bonding
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Contract Insurance & Bonding Services
●Bank Instruments guaranteeing contract performance
Performance Security Guarantees (PSG)
Performance Security Insurance – wrongful call (PSI)
●Bank Instruments guaranteeing contract performance ●Foreign Exchange Facility Guarantee (FXG) ●Financial Security Guarantee (FSG) – Offshore and
Supplier ●Surety Bond Reinsurance (SBI)
1515www.edc.ca/financing
Financing Solutions for Exporters
●Export Guarantee Program
●Direct Buyer Loans
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• A risk sharing guarantee designed to encourage Financial Institutions to advance loans to smaller exporters by providing additional security
• Guarantee covers the Financial Institution’s credit facility for :
Up to 90% for guarantees ≤ 500k Up to 75% where EDC’s exposure is between 500K and 10.0
million Up to 100% for guarantees in support of qualifying foreign
investment-related credit facilities of Canadian companies.
• Existing operating lines of credit are not affected.• Financial Institution is responsible for funding and
perfecting security
Export Guarantee Program
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● Loans can be used to cover WIP financing needs for direct exports as well as indirect (i.e. component sub-supply in Canada related to a product that is ultimately exported).
● Approved loans can be up to 100% of the contract costs.● The term of the loan is linked to the payment terms
identified in the commercial contract.
Variations of support:1. Contract Specific – One-off or “Bulge” facility to
specifically support an export contract. 2. Revolving Facility – specifically support a series of
purchase orders or contracts knowing each deal is covered under the guarantee
Export Guarantee Program
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Variations of support: (Cont’d)
3. Operating Facility – A general corporate purpose facility to be administered by the provider in support of day to day operational activities.
4. Term Loan Facility – Infrastructure investment in Canada relating to
specific existing export contracts;
Foreign Direct Investment to support the acquisition of a foreign asset or company.
Export Guarantee Program
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●Tailored specifically to your commercial contract
●Disbursed to you by EDC on behalf of the borrower
●Meets the credit needs of your foreign buyer
●Offered at competitive interest rates & fees
Direct Buyer Loans (Buyer Credits)
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QUESTIONS?