Testimonials

Is Your Buyer Approved?

One of the most important steps you can take when negotiating a sale and prior to accepting an order will be to make sure that your buyer is approved and the invoice amount falls within the allowable credit limit. Violations of Discretionary Credit Limits are among the top reasons that claims are denied. In the event of a claim, you must be able to show what methodology and credit information you used to assign the appropriate credit limit to each of your buyers. Here are the buyer-limit "basics":

8 Things You Must Know
About Ex-Im Buyer Credit Limits

1)     You are required to actively manage buyer credit limits. Credit approval for all buyers is obtained under your discretionary credit authority ("DCL") or through Ex-Im Bank's underwriting process. The DCL authority means that Ex-Im has given you the authority to approve some buyers on your own without having to submit a Special Buyer Credit Limit application ("SBCL") to Ex-Im for their underwriters to approve prior to the first shipment on open terms. However, the DCL is not valid in all cases. Read on or click here for more details...

2)     There are three ways to qualify a foreign customer: 1)Use your "Credit" Discretionary Limit (Credit DCL), 2) Use your "Ledger" Discretionary Limit (Ledger DCL), or 3) Apply for a Special Buyer Credit Limit (SBCL). These limits are stated on the declarations page in your policy and are listed on your landing page on Ex-Im Online (Ex-Im Bank's online policy management tool). Each SBCL will have a separate endorsement attached to your policy. If you would like help clarifying these amounts, or accessing Ex-Im Online, please Contact Us.

3)     "Credit" DCL applies to new customers or those with whom you have no experience on open account terms. "Ledger" DCL applies to existing customers with whom you have prior experience on open account terms in the past 12 months. If you want to offer your buyer a credit limit larger than your approved Credit or Ledger DCL (or for longer terms), you must apply for an SBCL and go through the Ex-Im Bank underwriting process.

4)     Your DCL authority is not valid in all countries or for all terms. Check the Country Limitation Schedule online to find out if this applies to your buyer's country. SBCL applies to customers whose requested credit limit and/or terms exceeds your Credit/Ledger DCL authority OR in cases where the DCL is not valid. If there is a Note 1, 2 or 4 in the right hand margin of the CLS, you cannot use the DCL for buyers in that country. A Note 6 has caps on the amount of credit you can approve. In these cases, even if the credit limit amount you need is within your DCL limits, you must apply for an SBCL because Ex-Im withdraws your authority for that country and the underwriter must approve the buyer for you.

5)     If you ship more product than your existing credit limit allows for any buyer, you are still required to report and pay premium on the total amount shipped, including the balance that is greater than the approved credit limit. The over-shipped balance may become eligible for coverage if the buyer makes partial payments that reduce the outstanding debt to within the approved credit limit. This encourages you to set the appropriate limit for each buyer.

6)     Buyer payments must be applied to the oldest invoices first. This will impact the total amount available under your DCL authority. If you expect to exceed the established credit, please contact us to discuss applying for an increase to the credit limit.

7)     Unpaid invoices at 90 days past due cancel your DCLs and suspend your SBCL use. When the buyer's account becomes current again, you can use the SBCL until its stated expiration date BUT you must re-qualify DCL buyer limits.

8)     SBCLs do not auto-renew with your policy. If you do not ship and pay premium during the policy year for a buyer approved via SBCL, the SBCL will not auto-renew. You must reapply and submit updated credit information to Ex-Im Bank for underwriting as appropriate.

As your broker, we are here to help. We will gladly review the details of your policy with you. We can also provide training on the online policy management tools, show you where your policy discusses these issues, and make sure that you have the best coverage to suit your business needs. Contact Us today!

As always, we are here to support you. Please feel free to contact us at TAG if we can be of assistance in any way.

Kind Regards,

Curt, Leslie, Ursula, Jackie and Sara
Trade Acceptance Group, Ltd.