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This story appears in the July 1996 issue of Entrepreneur. Subscribe »

Not long after partners Stephen Schultz and Timothy Burgess purchased export credit insurance to protect their electronics distribution business, they had to collect on it-to the tune of more than $250,000. A bankrupt subsidiary of a German company with whom the partners had been doing business was unable to pay their Leominster, Massachusetts, company, Kerotec Inc. But thanks to the new insurance policy, the partners got paid anyway.

In the past, if you wanted to sell to foreign customers, you had limited payment options: open credit terms (risky for the seller unless a long-standing business relationship existed), cash in advance (this is rare), or a letter of credit. Now, with export credit insurance, there's another option to protect the seller. According to Joe Grimes of American Credit Indemnity (ACI), a Baltimore-based subsidiary of Dun & Bradstreet, export credit insurance protects companies against nonpayment, slow payment and insolvency.

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