Export Trade Credit Insurance (TCI) protects your business from non‐payment of an overseas commercial debt where a company offers open account credit terms to a customer. It provides insight and knowledge that ensures greater confidence when extending credit to new and existing markets as well as increasing sales to existing customers.
With the right TCI policy, a company can make an informed decision to export to other countries with the knowledge that 90% of their sales ledger (95% for political risk) is covered. Before agreeing to extend open account terms to a customer overseas the policy holder would obtain a limit endorsement which depending upon the market could cover non‐payment typically due to the insolvency of the end customer from both a commercial and political risk perspective.
3 Key benefits of Export Trade Credit Insurance
1. Prior to agreeing to extend open credit terms to an overseas buyer an insured can obtain a credit limit based upon in many cases locally sourced information that may not be available in the open market.
2. In the event of non‐payment due to the insolvency of the insured debtor or an insured political event many Underwriters will assist in the collection of the amount owed which could also include legal action.
3. The policy can be assigned to a company’s Financier in order to raise additional working capital for overseas sales
Of course, like all Insurances, there are many different types of policy and, there are many providers.
Before considering the tangible benefits of Export Trade Credit Insurance a Specialist Broker must undertake a country and debtor risk assessment to ensure that any cover matches the specific needs of the company as well as identifying the tangible benefits for the premium being paid.
If you have any questions about Export Trade Credit Insurance or would like us to provide a risk opinion on an overseas buyer, then please do not hesitate to contact us.