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Export credit insurance policy a boon for $28 bn US textile export industry

"As per Washington-based National Council of Textile Organisations figures, US textiles and apparels exports was worth $28.6 billion in 2017. In fact, exports helped the country pull out of global recession. No wonder many small and medium sized textile companies in the US are boosting their bottomline by targeting consumers living outside the United States. Around 95 per cent of consumers of US textile reside outside, enabling them to sell their wares across the North America Free Trade Agreement (NAFTA) and Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) areas, as well as in Asian and European markets."

 

Export credit insurance policy a boon for 28 bn US textile export industry 002As per Washington-based National Council of Textile Organisations figures, US textiles and apparels exports was worth $28.6 billion in 2017. In fact, exports helped the country pull out of global recession. No wonder many small and medium sized textile companies in the US are boosting their bottomline by targeting consumers living outside the United States. Around 95 per cent of consumers of US textile reside outside, enabling them to sell their wares across the North America Free Trade Agreement (NAFTA) and Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) areas, as well as in Asian and European markets.

Many small businesses and corporate executives perceive exporting to be too burdensome or risky. They either do not sell overseas or sell in just a few markets that they are comfortable in. One of the primary reasons for this is customers sometimes fail to pay for the goods they receive.

Benefits of export credit insurance policy

An excellent solution to this is the Export-Import Bank (EXIM). EXIM, is a US federal government agency thatExport credit insurance policy a boon for 28 bn US textile export industry 001 enables domestic companies to compete abroad and increase global sales. The bank’s export credit insurance policy protects foreign accounts receivables generated by the sale of goods and services from US-based companies to international customers. The policy covers up to 95 per cent of sales invoice against nonpayment due to commercial — bankruptcy and protracted default for example such as war or insurgency — risks.

Export credit insurance policy also improves the competitiveness of textile companies in the world market. While American exporters resort to cash in advance to avoid nonpayment risk, most foreign competitors offer open account credit terms. They expect credit terms and companies that are unable to extend credit to lose out on valuable opportunities.

Export credit insurance empowers US businesses to negotiate credit terms — typically in 30, 60 or 90 days — with foreign buyers up front, which is a powerful marketing tool and gives a competitive edge that wins deals. EXIM can cover a company’s entire portfolio of customers or a single buyer. In addition to reducing the risk of nonpayment and offering open account credit terms to foreign buyers, EXIM’s export credit insurance can enhance a company’s borrowing capacity by assigning now secured foreign receivables to a lender, improving liquidity and easing cash flow constraints.

Small players benefit

Between 2015 and 2017, EXIM supported with over $253 million to US textiles and apparel exporters. Small businesses comprised 91 per cent of EXIM’s total authorisations.

Export credit has gone a long way to boost the country’s exports and there by overall revenues.

 

 
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