Export credit insurance is really important for businesses who trade internationally, and so we’re here to discuss what export credit insurance is, what the benefits are and who needs it for their business. We’d always recommend working with a credit insurance broker for this, as it will help you to get the right cover at the best price for your business.
What Is Export Credit Insurance?
Export credit insurance is a type of insurance that protects your business in the event that someone who owes you money doesn’t pay. When you trade on a credit basis, offering a service or goods in advance of payment, this protects your business in the event that they fail to pay for whatever reason. This could be the business liquidating or simply dropping off. It’s much harder to trace lost, unpaid or stolen funds when you’re trading internationally, as the laws differ around the world. So, in this case, if the customer fails to pay, your insurance will.
There are many different types of export credit insurance, whether you want to insure a single account that is quite high risk, you want overall cover for your trades or you want to protect your business with bad debt insurance. This is the advantage of working with a broker, as you can tell them how you function as a business and they will be able to recommend the right cover. Working with a broker doesn’t cost anything, as usually they’re paid in commission when they introduce you to the different insurance providers, however the good brokers are very impartial and will only be focused on finding the right cover for you.
What Are the Benefits Of It?
There are many benefits of export credit insurance. Firstly, it allows you to expand into new markets more comfortably without being worried that it could be detrimental to your business. Whilst of course you need to do your due diligence when expanding internationally, export credit insurance provides that extra safety net.
Additionally, with export credit insurance, you’re able to offer more favourable terms when you’re trading. This can be a huge benefit and help you to win new business more consistently. Again, this should be done with caution, as if you do need to claim on your insurance there are fees and increased costs involved, however it does provide more confidence.
Lastly, having export credit insurance can also improve your financing and investment options. Banks or investors will look at your business more favourably with this safety net in place and so you will be more likely to get the financial support you’re looking for.
These are just a few of the benefits that come with export credit insurance for your business, as well as providing excellent peace of mind in this turbulent time when you’re expanding internationally. Planning and preparation are absolutely essential when expanding internationally, and one important stage of that is sorting out the relevant insurance to protect your business.
