Achieving the Exporters' Edge with Export Credit Insurance
In today's interconnected global economy, international trade plays a crucial role for business success across a diverse range of sectors. Exporting goods and services not only unlocks new markets and boosts revenues, but also fuels economic growth. Yet, within the vast opportunities that international trade offers, there inherently lie risks. An effective tool that empowers UK exporters to navigate these risks with confidence is Export Credit Insurance.
Also known as trade credit insurance, Export Credit Insurance is a specialised insurance product designed to shield businesses from bad debt write-offs or delayed payment from their overseas customers. This insurance acts as a safety net, enabling exporters to explore new markets, maintain a consistent cash flow and expand their global footprint. The key benefits that Export Credit Insurance offers to UK exporters are:
- Mitigated Risks and Financial Safeguarding: Export Credit Insurance safeguards exporters against the risk of non-payment due to factors such as insolvency, political instability or commercial disputes. By mitigating these risks, exporters can focus on their core business activities without the fear of financial loss due to customer defaults.
- Market Diversification: Export Credit Insurance allows UK exporters insights and written credit limits so they can venture into new and potentially high-growth markets that may have been considered too risky otherwise. This opens doors to increased market diversification, reducing dependence on a single market and minimising the impact of economic downturns in any one region.
- Enhanced Financing Opportunities: Lenders and financial institutions are often more willing to provide working capital or financing to exporters who have Export Credit Insurance. The insurance coverage supports the collateral, improving access to credit and enabling businesses to take advantage of growth opportunities.
- Maintaining Cash Flow: Delayed payments can disrupt a business's cash flow, leading to operational challenges. Export Credit Insurance ensures that if a buyer fails to pay, the exporter is compensated, allowing them to meet their financial obligations and maintain a healthy cash flow.
- Competitive Advantage: Being covered by Export Credit Insurance can enable exporters to bid with a competitive edge. By offering more flexible payment terms, exporters can attract more customers and help secure larger contracts.
By minimising risk and providing financial security, Export Credit Insurance actively supports export growth. It encourages businesses to explore new opportunities, expand their international operations and contribute to the UK's economic prosperity. It is a vital tool for UK exporters to navigate the complexities and uncertainties of international trade. By providing benefits including financial protection, and risk evaluation, it empowers exporters to expand their reach, establish lasting business relationships and drive economic growth.
If you are considering Export Credit Insurance as part of your export strategy, read BExA’s Guide to Export Credit Insurance, which provides a practical and impartial explanation of the product for UK exporters and insurers.
Posted 17 August 2023