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Insurance of a short-term supplier’s credit against risk of non-payment (Product ABT)

Insurance of a short-term supplier’s credit against risk of non-payment (Product ABT)

News:

Thanks to the new EU exemption valid until 30.6.2021, EXIMBANKA SR can also insure receivables for traditionally marketable territories such as the EU countries, Canada, the United Kingdom or the USA, through our product "Short-term export supplier credit insurance against commercial and political risks (Product A, B)".

  

The insurance covers the exporter’s risks of non-payment of export and domestic receivables with private buyers.

With a short-term export supplier’s credit the exporter has commercial risks insured (insolvency, payment unwillingness) and at the same time it is possible with export receivables to agree on insurance of commercial risks and supplementary insurance against political risks (so-called territorial risks).

Online Insurance of receivables for small and medium-sized enterprises is a product focused on the support of small and medium-sized enterprises with their export. It is very simple. You simply need to fill in the application on a framework insurance policy or on an insurance policy which you will find below. Thus, from the comfort of your office or home you may 24 hours a day, 7 days a week resolve your export activity.

The insurance covers the exporter’s risks of non-payment for exports and domestic receivables with private buyers.

With insurance of export short-term receivables against commercial and political risks the exporter has commercial risks insured (insolvency, payment unwillingness) and at the same time it is possible with export receivables to agree to insurance of commercial risks and supplementary insurance against political risks (so-called territorial risks). With insurance of short-term domestic receivables commercial risks (insolvency, payment unwillingness) are exclusively covered for the exporter by the insurance.

Advantages for the exporter

  • We pay insurance claims even with lower levels of damage, namely from EUR 500.
  • We pay a client for the actual damage incurred, reduced only by the client’s deductible. We do not specify a maximum insurance claim.
  • With calculation of the insured sum we start from the insured amount. We do not specify a minimum annual insurance.
  • Simplified conditions of loan insurance.

How it works

  Working of the insurance
1. The product eMSP features a simplified process when a client fills out an application for a framework insurance contract or insurance policy on the Internet at any time from the comfort of the home or office.
2. A generated new insurance policy will be sent to the client’s e-mail address, which the client then sends by postal mail to the address of EXIMBANKA SR, where the application will be further processed.
3. Further communication of a client with EXIMBANKA SR runs only electronically without the necessity of printed paper or sending paper documents. The client has the opportunity of applying online not only regarding new insurance limits, changes to them or fulfilment of a monthly declaration on export carried out, but likewise apply for a possible insurance claim on behalf of the financing institution.

With insurance of short-term domestic receivables commercial risks commercial risks (insolvency, payment unwillingness) are exclusively covered for the exporter by the insurance.

Advantages for the exporter

  • Enables the provision of more advantageous prices. Upon comparison with a letter of payment or a bank guarantee the insured receivable offers a more suitable price.
  • Protects your business. Your trade is protected against unpaid receivables or the problems of your buyer from title restructuring, bankruptcy, etc.
  • Saves costs for managing risk. EXIMBANKA SR is a partner of the French Crédit Alliance and together with a network of other agencies around the whole world it is capable of securing a very quality evaluation of buyers, including their payment ethics. Recovery of a receivable abroad is also included in the price and upon payment of an insurance claim EXIMBANKA SR becomes its owner.
  • Helps to acquire necessary financing. You can use insured receivables as a guarantee for the purpose of obtaining additional financial resources or through endorsement or accession to the insurance policy of our bank.
  • All for an affordable price. Let us work up a price offer free of charge. As our client you can use different forms of consulting and the experiences of our workers from different territories or branches.

How it works

Insurance of a short-term supplier’s credit against risk of non-payment (Product ABT)

  Insurance procedure 
1. The exporter contacts the employees of EXIMBANKA SR before concluding or during the term of the contract. Employee provides the exporter with professional advice and/or directs him to choosing appropriate method of securing receivables. EXIMBANKA SR provides the exporter with information about insurance of receivables and/or insurability of a specific buyer (customer) free of charge in form of preliminary offer, where exporter obtains basic overview of services provided.
2. Depending on the offered volume of the sale of goods and/or services registered for insurance, territory of export, type of payment condition, invoices maturity periods and risk of the buyer and the sector, EXIMBANKA SR determines the insurance rate. The amount of retention is determined depending on several factors, in particular the buyer’s country or buyer’s creditworthiness, at least 10%.
3. If interested, the exporter fills in the application for conclusion of the framework insurance contract with annexes including the credit limit application form. Interested party sends filled documents to the EXIMBANKA SR address. After the conclusion of the framework insurance contract, the exporter (client) receives complete information about insured buyers including prepaid monitoring of their situation.
4. EXIMBANKA SR will provide the exporter with a direct (investment) credit for the purchase and modernisation of technology and related infrastructure. The credit may be used for financing of costs incurred for purchasing the technology or its modernisation within 6 months before the day of credit drawing.

Course of insurance
The insurance starts by the approval of the framework insurance contract and decision to grant about provision of the credit limit for every purchaser with repeated goods supplies and/or provision of services in certain period of time (revolving credit limit).

The exporter pays the insurance premium monthly on basis of an invoice issued after export /sale value of each individual buyer has been reported in form of the export /sale notification form. The exporter is obliged to send filled the export/sale notification form with reported volume of export for the respective month to individual buyers within 5 calendar days after the end of the calendar month. Based on the export volume reported, EXIMBANKA SR calculats the insurance premium and sends the invoice. In the case of zero performance, the exporter pays no insurance premium in the relevant month.

The exporter continuously monitors the payment discipline of his buyers. In the case of payment delay of more than 30 days, the exporter reports the threat of the insurance claim.

However, within 60 days of the payment delay, the insured person shall notify this fact to EXIMBANKA SR using Insurance claim notice for short term supplier credit insurance against the risk of payment default (ABT) form, including the declaration of insured client. The next procedure for recovering due amount will be realized in mutual cooperation with specialized departments of EXIMBANKA SR in order to reach payment of due amount.

Frequently asked questions

What is the period of the insurance?
The insurance policy is usually concluded for 12 months with automatic extension for an additional 12-month period, aside from one-time insurance policies, which are concluded for the period of the insurance.

What are the basic conditions of the insurance?
• Minimally 10% participation of the client, depending on the riskiness of the territory or the credit of the foreign buyer may be increased by 5 – 10%.
• Common maturity of invoices is maximally to one year, however, to 270 days from the issuing of the invoice.
• Receivables cannot be assigned to a third party without our consent.

What kind of risks does the insurance cover?
The insurance is intended for marketable risks, i.e. those which it is possible to assure on the reinsurer’s market. The insurance covers primarily commercial risks with possible political supplementary insurance:
• commercial risks – are connected with the bad financial situation, insolvency or a bankrupt buyer, or its unwillingness to observe its contractual payment obligations;
• political risks – risk of non-payment of a receivable for political and administrative accidental or hard to foresee events in the country of the buyer, such as, e.g. nationalization, embargo, the impossibility of transfer and others.

How much will it cost?
The level of the premium rate depends on several factors, such as the country of the foreign buyer, the character of the foreign buyer, the length of the contract, the method of ensuring payment, delay of payments. The premium rate is assessed for each project individually.

How is the insurance paid for?
In the case of a one-time insurance policy the exporter pays the premium in advance i.e. even before shipping the goods. In the case of revolving (repeated) supplies the exporter pays the premium usually to within 14 days on the basis of declaring the imports for the previous month.

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