“Credit insurance protects your commercial accounts receivable from unexpected and catastrophic losses, resulting from insolvency or "non-payment" by your buyers.”
Credit Insurance combines 3 services:
Risk prevention: Pre-selection of solvent customers
Debt recovery: Pre legal and legal Management
Payment of claims: Guarantee against unpaid bills
Advantages of Credit Insurance:
Credit insurance is an essential tool for managing your trade receivables. In today's business environment, companies like your own are under constant threat from the loss caused by the bankruptcy of a key customer. Even the best credit management cannot guarantee payment. By insuring your accounts, your payments are covered.
Why Your Company Needs Credit Insurance
Terms: Cash in advance and letters of credit are no longer competitive terms in the international marketplace.
Creditworthy Account: Creditworthy foreign companies, accustomed to buying on open account from their other suppliers, are going to expect the same terms from you.
Without Credit Terms: Your customers in emerging markets, on the other hand, may face scarce capital and high interest rates, making it difficult or impossible to order your products without credit terms
Cash Flow Problems: You need to extend competitive terms to grow your international business, but what happens if you don't get paid? Your foreign customers could file bankruptcy, run into cash flow problems, suffer from currency devaluations, or fail to pay you for a variety of other reasons
You can protect your foreign receivables against non-payment risks with an export Credit Insurance Policy
What Risks Are Covered?
Non-payment Invoices: Export credit insurance protects your foreign receivables against commercial and/or political risks which could result in non-payment of your invoices.
Non-payment Invoices: Export credit insurance protects your foreign receivables against commercial and/or political risks which could result in non-payment of your invoices.
Against liquidation: Commercial risks take the form of buyer insolvencies (e.g. bankruptcy) or protracted defaults (slow payment).These problems could occur for many reasons, such as
Fluctuations in demand
Natural Disasters
General Economic Conditions in your customer's country.
Political risks include war, riots, and revolution, as well as currency inconvertibility, expropriation, and changes in import or export regulations
All of your export receivables can be insured under one ‘multiple-buyer policy’, or in some cases you can purchase ‘key-buyer’ OR ‘single-buyer coverage’. Export sales of all types of products may be covered, regardless of content or where the products are manufactured. Any kind of exporter can apply for receivables insurance, including manufacturers, distributors, dealers, etc.
Summary of Need for Export Credit Insurance
Payments for exports are open to risks even at the best of times. The risks have assumed large proportions today due to the far-reaching political and economic changes that are sweeping the world. An outbreak of war or civil war may block or delay payment for goods exported. A coup or an insurrection may also bring about the same result
Economic difficulties or balance of payment problems may lead a country to impose restrictions on either import of certain goods or on transfer of payments for goods imported. In addition, the exporters have to face commercial risks of insolvency or protracted default of buyers. The commercial risks of a foreign buyer going bankrupt or losing his capacity to pay are aggravated due to the political and economic uncertainties. Export credit insurance is designed to protect exporters from the consequences of the payment risks, both political and commercial, and to enable them to expand their overseas business without fear of loss
