There are many ways to sell to customers in North America. Many years ago because the market in North America was so big, so new, and so virgin (if one could say that), foreigners selling into North America were mystified by its vastness of opportunities. When visiting its size, diversity of people, and market potential for sales overwhelm North America one. Sellers saw that customers were trading freely on open account terms without payment guarantees. Buyers and sellers did business domestically without payment guarantees. Companies were succeeding and growing. Years ago the market was small in comparison to today's market and not so many countries were involved in producing and exporting to this market. A seller had to develop the market and assist buyers to promote their stone. Incentives were given to the buyers in the form of long-term payments like 90 days from bill of lading date. Originally the banks through documents or drafts handled this. Eventually when customers complained that these documents did not arrive and delayed shipments at the ports causing demurrage or charges for storage that cost the seller and the buyer money and time, it changed to where the buyer would receive documents directly. As time went by, buyers became used to these terms. Suppliers in order to compete had to sell this way and out do their rivals by selling with even longer terms like 120 days or 180 days; even some, for various reasons, offered consignment terms, which means the buyer would pay when the goods were sold and money collected to the Seller.

Well times have really changed. Sellers or suppliers are finding that payments are not guaranteed even within the system in North America. Many distributors, contractors, or buyers in North America are not even getting paid themselves by their own customers and thus can not afford to pay the supplier. Bankruptcies and terms such as Chapter 11 are being learned by foreigners when they find out that the company they sold can not and will not have to pay the supplier at all. Suppliers are finding that they do not understand the legal system or ways of collecting money from their customers. Some suppliers are now changing their terms of sales to letters of credit only to find out that their competitors have not. Since it is still a buyer's market and hundreds of suppliers are selling with open account terms, how does one protect his investment and sell in North America? Some suppliers are just backing out and saying to themselves "let us sell South America or the Far East where buyers pay by letter of credit or some guarantee payment; and these buyers are not so demanding on the quality of the stone." Perhaps that is the answer. On recent trips to Spain I have found that many suppliers have reduced their sales to North America and are selling all they can to other countries with some guarantee payments. Also the selection of stone in Spain is not abundantly available in first or extra anymore in most marbles. The granite demand in North America is tremendously low, so now what to do?

The answer is simple. Miss working with one of the largest market potentials in the world or try working to develop not only the market, but also your financing in North America. When North America rebounds suppliers will find that they will have a hard time rebounding them back into this market. To sell in other countries means to know those markets as well as the government, legal, financial, and the customs and traditions of doing business. Every country does business differently. The Japanese are notorious for being the best in the world when it comes to studying the market they wish to enter. All suppliers and countries to compete in the global market must do the same.

Selling stone or goods is not just selling the product but the terms for which they will be paid. Suppliers are learning alternative ways to meet the market demands and some of these ways are as follows:
Standby letters of credit Third Party Sales
Deposits Joint Ventures
Insurance Stock in the buyers company
Bank guarantees Consignment
Personal guarantees Your own warehousing
Factoring companies Agent handled warehousing
Loan agreements Protection on inventory by ICC

These are some ideas to name a few that might be considered. Many suppliers are looking and studying new ways to sell. What is right for you? These are just examples to be studied by each supplier.

The simple solution is to sell with a documentary letter of credit payable with terms of 90 days or whatever is negotiated. However, if one knows most buyer in North America, they know this is not possible in 95% of the times. An alternate is to ask for a "Standby Letter of Credit." This is less expensive and can be the back up guarantee the supplier wants when he sells on open account. The way this works is that the buyer is sold on open account terms and will pay the supplier directly; company to company, in 60 days or whatever is negotiated. If the supplier does not receive his money within, for example, 75 days then he can collect 100% at his bank with the standby letter of credit assuming it is properly written.

Get a local or even foreign insurance company to guarantee the money. This is fine and works in some cases. The problem is that this can be costly to the supplier and can cost upwards of 5% or more. Secondly, it takes much time to get the account established with insurance companies and in the meantime the supplier has lost a sale. When the buyer contest the quality of the goods sold, it becomes difficult for the insurance company, which in most cases knows nothing of stone, to resolve this problem. The supplier is in difficulty again. In some cases, the insurance company will only guarantee 75% of the payment and again it takes time to get this paid to the supplier should a problem occur. Some suppliers are now building into their price the cost of this insurance, or asking the buyer to pay half the cost.

Check closely the credit of your buyers. Banks can get information as well as credit companies to get financial reports on the companies you wish to sell. This is very logical and correct. One should know very well the company you are going to sell. This is not a guarantee. Sometimes the reason a company has money in the bank is that they do not pay suppliers. One also has to check the commercial trade and find out how their buyer pays. Some people check for example D&B, Dunn & Bradstreet or other such companies. This is fine but after a while they realize these reports are really limited and not correct and clear, especially on international buyers. Again, however, this still helps suppliers to get a picture of their buyer. Some suppliers are learning to get references from their customers and check out how they are paying their other suppliers. This too is good and expands the picture on the client. Do not expect it to be the best resolve. Having a history of business buying and payment is always good and should always be pursued. Many suppliers depend on local market offices in North America or agents selling their products to know their clients. This is good too but not even these people without the monetary support of the supplier can do all the above themselves. Business matters are time consuming and cost money. Most suppliers do not want to invest any money or time to know the customers unless it is a simple sales trip. In this trip they will never really study the credit of the customers and rarely ask for this credit information. You become too interested in the sale.

Some suppliers are taking the initiative to work and pay companies in North America to gather information on the market and the clients. Some governments are supporting trade bureaus in the countries to assist them with this information. More of this should be done and promoted by the government and the suppliers together. Push your local trade association to establish with the banks credit information on buyers and exchange freely this information.

Other avenue of selling is to ask the customer to give a deposit in advance of shipping of 25 to 50% of the order thus reducing the risk of full payment being received. Some customers are paying suppliers CAD or cash against documents and if properly done this can be a guarantee of payment of sorts. In most cases it can also be very risqué and no guarantee at all.

In some cases, the suppliers are asking for the customer to supply financial reports and in turn to sign a paper that says that if the company does not pay the supplier the owners are personally responsible for the payment. This type of added pressure puts the owners in liability and gives more seriousness to the sell. In North America a corporation can go bankrupt and the owner may not be responsible for the payment. If the owner signs a personal guarantee it is another matter.

Some suppliers are asking the buyer to sign special papers that protect the inventory or stone being sold. This agreement does not give the ownership of such goods over to the buyer until the goods are paid for under ICC (Interstate Commerce Commission) rulings. This will give some added protection to the supplier. Some suppliers are asking that buyers sign loan agreements as if they were borrowing from a bank themselves. These loan agreements if locally written can be very enforceable.

You may wish to consider using finance companies in North America to guarantee to the credit such as factoring companies. These factoring companies will check the credit and collect the money assuming there is no dispute over the goods. Others are using legal means to establish credit and sales with buyers.

If you have a good agent you might consider joint venturing with either the buyer or the agent to stock goods. This way you become partners and both parties takes part in the losses but also in the profit of the sales. By increasing your profit you can afford to take more risks.