Insuring against non-payment when exporting
How to protect your business from the risks of non-payment by your buyer when exporting.
While most businesses insure their fixed assets, many overlook the risk of non-payment by the buyer. There may be buyer, country or political reasons for non-payment.
As an exporter, you can take out export credit insurance. This protects against non-payment and is an important tool in credit management. It means you can sell more goods or services on credit terms and increase your borrowing power.
However, it should not replace good credit management practices. .
Export insurance policy
An export insurance policy insures an exporter against the risk of not being paid under an export contract. It may also cover the risk of not being able to recover the costs of performing that contract because of specified reasons.
If you have not been able to purchase an export insurance policy privately, you may be eligible to , if you meet all of the criteria.
Bond insurance
Many buyers abroad ask sellers for bonds or bank guarantees in case the seller doesn't keep to their side of the contract on quality or performance after receiving advance payments.
UK Export Finance where the exporter, the buyer and the bond meet the criteria.
If your business does not meet the criteria, you can ask a private credit insurer for a quote. .
Tender exchange rate indemnity
This insurance will protect you against adverse exchange rate movements when tendering for contracts in a foreign currency. If the currency weakens between submission of your business tendering and winning the contract, you could lose a lot of money.
Some private credit insurers offer this insurance.