Insurance makes importing easier
By Brian Carroll -- Furniture Today, November 11, 2002
San Carlos, Calif. — BB&T Factors has joined with a division of Avalon Worldwide and a Philippine bank to offer smaller and midsized furniture manufacturers credit insurance on import transactions.
The insurance is designed to replace letters of credit, commonly called LCs, which are typical in international trade. LCs can require significant amounts of cash on the part of importers before finished goods can be shipped by source factories. The new credit insurance method promises to free up this cash for other business activities.
BB&T will qualify customers of Avalon's APWTrade division, a furniture sourcing company. One of the Philippines' top 10 commercial banks, Banco de Oro, will finance the order with collateral from the World Bank and credit guaranteed by BB&T.
Furniture produced at APWTrade factories in mainland China and Cebu, Philippines, will be shipped to customers on open credit terms — net 45 days F.O.B. or net 30 days R.O.G. — based on BB&T credit approval.
Funds will be released to overseas manufacturers in accordance with the terms of the purchase order.
BB&T will complete the transaction by collecting from APWTrade's U.S. and Canadian customers.
"We do business with mostly medium-sized West Coast (furniture) manufacturers, so the program is designed for smaller and medium-sized companies for whom importing is a real challenge financially," said Mike Dikas, marketing director for APWTrade. "This new program will help them with their cash flow."
BB&T is including the new credit insurance program with its existing factoring programs for OEMs in the United States and Canada.
APWTrade currently sources from four factories in Cebu and a dozen in China, mostly in the Shenzhen area of southern China. U.S. customers include Blackhawk, Boyd Furniture, Highland Designs and Woodbrook.
"We provide a nearly captive manufacturing environment for buyers who want product manufactured to spec," Dikas said.
