Why you need export credit insurance

Cash-in-advance and letters of credit are no longer always competitive terms in the international marketplace. Facing limited access to capital in their own countries, foreign companies are seeking more than ever before to buy on credit terms.

You need to extend competitive open-account terms to grow your international business, but what happens if you don’t get paid?

Your foreign customers could go out of business or file bankruptcy, face currency devaluations or foreign exchange problems, run short on cash, take you for a ride, or fail to pay you for any number of other reasons. You can protect your foreign receivables against non-payment risks with an export credit insurance policy.


What export credit risks are covered?

Export credit insurance protects your foreign receivables against virtually all commercial and political risks that could result in non-payment of your export invoices.

Commercial risks include bankruptcy, receivership, and other kinds of insolvencies, as well as protracted defaults caused by cash flow problems, balance sheet issues, bad faith, market demand, currency fluctuations, natural disasters, or general economic conditions in your customer's country or abroad.

Political risks include currency inconvertibility, foreign exchange controls, transfer risks, war, strikes, riots, revolution, confiscation, expropriation, nationalization, embargoes, trade sanctions, and changes in import or export regulations.


How much does export credit insurance cost?

Premium rates for export credit insurance are based on the terms you extend, the spread of your buyer and country risks, and your previous exporting experience. The cost of foreign receivables insurance is low, typically a fraction of one percent based on sales volume, in most cases much less than the fees charged for letters of credit.

Whether or not you pass this incremental expense to your overseas customers, the price of export credit insurance coverage is insignificant compared to the additional business you can obtain by extending competitive international credit terms.


Why you should work with Meridian

Over the past fifteen years, Meridian Finance Group has helped hundreds of exporters increase their international sales using export credit insurance.

All foreign credit insurance policies brokered by Meridian are backed by top-rated and re-insured commercial insurance companies or by an agency of the U.S. government (Ex-Im Bank). We offer accounts receivable insurance policies from a wide selection of underwriters, enabling us to quote the most competitive premium rates in the market.

We understand your business. Our staff is multicultural and multilingual, with experience not only in trade finance, foreign receivables insurance, and international credit, but also exporting, importing, manufacturing, logistics, and distribution.


Insurance as a sales and financing tool

Increase your international sales and profits by using export credit insurance to extend payment terms that make it more economical for your foreign customers to purchase larger quantities. Shipping bigger orders can help you negotiate better pricing from your suppliers, make longer manufacturing runs, and transfer inventory overseas.

Negotiate stronger overseas representation by using foreign receivables insurance to offer competitive credit terms to your international distributors. Provide incentives to keep more of your products in their country’s supply chain, increasing your market share and local brand recognition.

Open new markets which your company might otherwise perceive as too risky for extending international credit terms without accounts receivable insurance. The opportunity to establish market share in emerging economies has never been greater.

Enhance your borrowing capacity and obtain more favorable financing by including your insured export receivables in your collateral base. Foreign credit insurance makes your international A/R more attractive to banks and other asset-based lenders. You can assign export receivables insurance policy proceeds to the lender of your choice.

Strengthen your balance sheet and keep your company's financial position secure with foreign credit insurance, despite exposure to unforeseen events, concentrations of export receivables risks, and changing international market conditions.

Covering your foreign receivables with international credit insurance may also enable you to reduce your bad debt reserves.

International receivables insurance can help facilitate the "true sale" of your export receivables per FASB 140, on a case-by-case basis or in the context of a formal asset securitization.