The Fear of Going Global - Medical Device Companies Nervous About Dangerous Markets

Medical device manufacturers are often hesitant to extend lines of credit to international customers. Typically, this is the result of negative stereotypes or the fact that is very difficult to verify whether or not a new customer has the ability to pay credit extended to them. With the global market in what seems like a steady free fall, it is unlikely that small and mid sized medical device manufacturers will change their policies anytime soon. This can significantly hamper the growth of manufacturers, as many of the larger companies have the domestic market on virtual lock down. Mid and small sized manufacturers should use the international market place as a lucrative way to drive revenue and establish their own dominance.

The biggest fear that is associated with extending lines of credit internationally is that often the customer is simply a voice (or email). It is very difficult to verify that everything a customer is telling you is the truth. In many countries, laws regarding disclosure of financial statistics are not enforceable, so while a customer may claim to have certain level of revenue, it is simply tough to verify. This is not to say that all international distributors or medical centers lie, but as the old saying goes, "one bad apple spoils the bunch". In the case of places like Mexico and Greece, there has been a rash of incidents where an individual sets up a false medical center or practice. They then play on the sympathies of companies here in the U.S. and get LOC's extended to them. They quickly turn around, sell the equipment, and make a hefty profit, leaving the manufacturer with nothing but a fake name and location. So what does the manufacturer do? They no longer extend LOC's to anyone, even customers that have been paying upfront for years and have earned the right. This essentially cripples their sales and hampers their ability to grow, neither of which can be afforded in the battlefield that is the medical device industry.

Manufacturers do have options, but many have not utilized all the resources that are out there. First and foremost, having a sales team travel and meet with potential clients is the simplest way to verify whether or not they are worthy of a LOC. Unfortunately, travel is costly and often simply not feasible. And it does not guarantee anything. Next is the option of referring potential customers to a leasing or financing company. While this may seem like a wonderful idea, often the potential customer will not be able (or willing) to afford the additional finance charges. Third, and of course most hampering yet, would be to require all payments upfront. In a perfect world, all customers would be able to upfront. But in the international market place, this is simply not feasible.

The best option would be for companies to use their own in house team to evaluate an existing customers ability to pay and then extend a LOC that is on the smaller side. Allow the customer to prove themselves by paying within terms. Pairing with an A/R management firm like ABNA International can help to safeguard a company while it runs international clients through a trial period. Imagine the increase in revenue that could be realized if you were able to do this? Sure, A/R management firms cost money, but when one considers the increase in revenue, the rate they charge is completely insignificant.

ABNA International is a global A/R management firm that specializes in medical device collections. Currently, they are collecting in some of the most difficult regions in the world like Italy, Greece, Spain, Portugal, Mexico, South America, The Middle East, and Africa. They can quickly safeguard your receivables and allow your sales team to realize their full potential. Contact an ABNA representative today at 302-338-9617. Ask for Matt Macy.

By Matt Macy

The Fear of Going Global - Medical Device Companies Nervous About Dangerous Markets