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How to Mitigate Risks
When Doing Business in the
United States
May 20, 2009
1
Corporate Information
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.
2
Corporate Mandate
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.
3
EDC Financial Solutions
1. Credit Insurance
2. Contract Insurance & Bonding
3. Financing
4
Volume by Program
$51.0
65%
$50
$40
Source: EDC Data 2003
$30
15%
$20
13% $12.6 7%
$7.0 $7.1
$10
$0
CIB FIN PRI ARI
Source: EDC Data 20067 – Business Review $ = Billions 5
EDC International Volume (billion)
South Central
America Africa/Mid East
5.09 5.63 Asia/Pacific
7% 7% 8.89
North America &
11%
Carribean
49.827
65%
Europe
8.09
10%
Source: EDC 2007 annual report
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Customers Served by
Market Sector Team
Legend
TRN – Transportation
2500 2209 RES – Resources
LTM – Light Manufacturing
INF – Infrastructure & Environment
ICT – Information and
2000 Communication Technologies
EXT - Extractive
1500
1136
966 981
1000 727
436
500
0
TRN RES LTM INF ICT EXT
Source: EDC Data 2007
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Credit Insurance
1. Accounts Receivable Insurance (ARI)
2. Contract Frustration Insurance (CFI)
3. Single Buyer Insurance
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Accounts Receivable Insurance
• 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 9
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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EXPORT Check
Helps you decide how much (if any) credit you might
want to extend to a potential U.S. or foreign customer.
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.
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Contract Insurance & Bonding
(CIB)
www.edc.ca/insurance
www.edc.ca/bonding
13
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)
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Financing Solutions for Exporters
● Export Guarantee Program
● Direct Buyer Loans
www.edc.ca/financing
15
Export Guarantee Program
• 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
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Export Guarantee Program
● 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
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Export Guarantee Program
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.
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Direct Buyer Loans (Buyer Credits)
● 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
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QUESTIONS?
20
Thank you
Harold Riley – District Manager, Quebec
(514) 215-7210 – hriley@edc.ca
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