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Government Industry

Payment received in full: a trade complaint success story

Business America, August, 1997 by P.J. Calabrese

Through we at the Grieve Corporation (located in Round Lake, Ill.) are a relatively small company with only 125 employees, one of the areas in which we have grown significantly in the last five years is in expanding our export market.

Interestingly enough, we do not have a readily saleable product for export. We manufacture industrial ovens, furnaces, clean rooms, and pharmaceutical sterilizers. These products are big and expensive -- leading to substantial shipping costs. Add to this competition in every product line from local manufacturers overseas, and the hindrances that our company faces in exporting become apparent.

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Our success has been due in great measure to the cooperation we have received from the U.S. Department of Commerce. Specifically, the Gold Key Service has been instrumental in locating representation for the Grieve Corporation throughout the entire Pacific Rim.

One of the most important aspects of exporting is the collection and payment of the invoice. While the majority of our transactions are based upon a letter of credit, there are certain circumstances when other methods are used. For example, a government agency or a well-known major corporation can expect and sometimes demand open account terms.

In July 1994, we shipped a clean room oven to a customer in Hyderabad, Ind., "a government of India enterprise" according to the letterhead and purchase order. The letter of credit provided for a 10 percent hold back until such time as the equipment was installed and operating, in any case not to exceed January 1, 1995.

However, the remaining balance of 10 percent was not paid as of January 1, 1995. After months of correspondence and dozens of broken promises, the invoice remained unpaid for more than a year. On May 14, 1996, I instructed our accounting department to contact Robin Mugford at the Commercial Service's Export Assistance Center in Chicago. She provided us with instructions on filing a "trade complaint" that would involve the assistance of the Commercial Service's post in New Delhi. Approximately a month after filing the trade complaint, the balance of the invoice was paid in full.

Another case where extending an open account to a customer becomes a necessity is when there is not enough time to establish a letter of credit. This can occur when the customer needs immediate shipment of replacement parts for an existing Grieve product or if a piece of equipment is out of service.

Just recently, we encountered this situation. We shipped parts for one of our units to a customer in Abu Dhabi, United Arab Emirates. This transaction occurred on open account, as demanding a letter of credit or a wire transfer of funds would have delayed the emergency service our customer needed. There was absolutely no reason to doubt that the customer, a major aircraft manufacturer, would not pay us promptly.

The parts were shipped in April 1996 and as of December 1, 1996, the invoice remained unpaid. As our previous experience with the Commercial Service's assistance in settling trade complaints had been positive, we again turned to the Chicago Export Assistance Center. About a month later, payment was received in full.

Frankly, I am absolutely amazed at the speed with which payment is received once the U.S. Department of Commerce gets into the picture. I realize that they have no enforcement authority and there is not much more they can do except contact the end-user and suggest they pay their invoices, but whatever they do -- it sure works. I would like to suggest that the Commerce Department write a reverse "success story" and tell us how they manage to effect payment of past due invoices so rapidly. I would like to train my accounts receivable department accordingly.

Government Industry

Payment received in full: a trade complaint success story

Business America, August, 1997 by P.J. Calabrese

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