Export credit insurance operates in the same way as trade credit insurance and focuses specifically on trading relationships with customers based overseas.
That means that if your customer fails to pay for goods or services that you have exported to them, your insurance company will compensate you.
Export credit insurance overview
Exporting can be fraught with pitfalls. You may be unfamiliar with local laws and customs and may find yourself operating in a territory with increased political uncertainty. This could include rapid or frequent changes to trading terms such as the sudden introduction of high tariffs.
An export credit insurance policy insures your accounts receivable and protects your business from unpaid invoices caused by political risks such as these, or customer bankruptcy and other reasons agreed with your insurer. It’s also known as debtor insurance, trade credit insurance and accounts receivable insurance.
As an international firm, with offices and expertise in more than 50 countries worldwide, Atradius is well-placed to understand your exporting needs and mitigate associated risks. We know that no matter how careful your business operations are customers can sometimes fail to pay. Unless you demand payment up front or are covered by credit insurance, this makes you vulnerable to bad debt. Export credit insurance protects your cash flow. It covers your trade with your customers, so that you still get paid even if they become insolvent. Learn more about Atradius India Credit Insurance Partners.
Credit insurance works by insuring your trade with your customer, not the individual transaction. This means every invoice with that customer is covered for the year. It’s used by businesses of all sizes to protect their trade. Businesses also use credit insurance to help them secure finance with banks, explore new markets with confidence and attract new customers with favourable credit terms. We have access to trading information on millions of companies worldwide, enabling us to support your own due diligence when assessing credit worthiness of trading partners. This can be particularly helpful when exploring new markets and building relationships with new customers.
Export credit insurance in practice
1. Apply for a credit limit for an existing or potential customer
2. Agree terms of the insurance with us
3. Enjoy positive and confident trading relations
4. Access instant debt collection support the moment an invoice becomes overdue
5. Benefit from compensation, often up to 90% of the invoice value if the debt in unrecoverable
Benefits of export credit insurance
Protecting your accounts receivable from potential bankruptcy is only part of the benefit this type of debtor insurance can provide.
Export credit insurance can help you:
- Grow your customer base as potential buyers may be attracted to your credit terms
- Enhance trade providing you with the confidence to develop and expand your market
- Guarantee cash flow enabling you to build strong relationships with your suppliers and employees
- Safeguard customer relationships through improved communication and enhanced credit terms
- Improve your access to finance and your relationship with your bank
- Meet the risk management requirements of your stakeholders or board and provide peace of mind
Export credit insurance is suitable for all businesses, from SMEs to large multinationals. Learn more about how export credit insurance can help your export trade with our suite of Atradius Trading Briefs. These free publications feature a range of subjects including how to avoid potential risks and barriers to trade and the importance of drawing up strong export practice sales contracts.