Credit Insurance

Why you need export credit insurance

  1. Never again have to worry about the risk of non-payment by a debtor
  2. Create more predictable cash flow cycles for your business
  3. Expand into new markets with greater confidence
  4. Limit your exposure to new credit customers you've never worked with
  5. Possibly secure more attractive loan facilities from your bank now that your receivables are insured

You need to offer competitive payment terms to grow your international sales. But what happens if your customers go out of business, file bankruptcy, run short on cash, or don’t pay for some other reason.

Export credit insurance protects foreign receivables against commercial and political risks.

COMMERCIAL RISKS

If there is a provisional compulsory sequestration order against your buyer;

  • If a Court accept the voluntary surrender of your buyer’s estate;
  • If there is a provisional winding-up order against your buyer;
  • If there is a statutory compromise or arrangement binding on all your buyer’s creditors;
  • If there is a provisional judicial management order against your buyer;
  • If there is a voluntary winding up of your buyer;
  • If you do not receive your payment for an undisputed insured debt six months after the due date.

POLITICAL RISKS

If a regulation restricts or controls the importation of goods into your destination’s country or from your input’s country  to Botswana;

  • If there is a strike outside Botswana;
  • If there are hostilities, war, rebellion, revolution, insurrection or other disturbance outside Botswana after shipment of the goods.

Export credit insurance does more than mitigate non-payment risks. It’s a sales tool that can help you win more international orders AND it’s a financing tool that makes your foreign receivables more attractive to lenders.

Domestic and Export markets

All of your insurable foreign receivables can be covered under one export credit insurance policy.

A specific credit limit will be approved for each of your foreign customers or, if you qualify for a discretionary limit, your policy will insure the credit decisions you make yourself based on your own experience.

Alternatively you can apply for a credit insurance policy covering only your largest foreign customers. Or you can be even more selective, as long as the sales you want to insure represent a reasonable spread of risk. Policies covering just a single customer are less common, but may be feasible in some cases for a very creditworthy foreign debtor.

If you want to cover your company’s sales in Botswana, BECI offers domestic accounts receivable insurance as well.

How much does credit insurance cost?

Rates for export credit insurance are based on the payment terms you extend, the spread of your buyer and country risks, and your company’s previous exporting experience.

The cost of export credit insurance is low, typically a fraction of 1% of your covered international sales volume. In most cases much less than the fees charged for letters of credit!

The price of export credit insurance is insignificant compared to the additional business you can win by extending competitive international payment terms.

Contact BECI at tel. +267 3188015 to get an appointment with an advisor to calculate the cost for your specific case

How BECI can help you?

Over the past 19 years BECI has helped hundreds of Botswana business to grow their international sales using Export Credit insurance.

All policies underwritten by BECI are backed by top-rated reinsurance companies. We offer coverage from every export insurance underwriter, enabling us to quote the most competitive terms and premium rates in the market.

More significant is the comprehensive technical support we provide to our customers. Credit insurance policies work differently from other kinds of insurance, so Meridian assists with policy compliance at the same time as we help exporters get the most out of their coverage as a sales and financing tool.

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

Credit insurance as a sales tool

  • You can increase your international sales by using export insurance to extend competitive payment terms. Credit makes it more economical for your foreign customers to order larger quantities, enabling you to negotiate better pricing from your suppliers, make longer manufacturing runs, and transfer inventory carrying costs internationally.
  • Export Credit insurance helps you negotiate stronger overseas by offering longer credit terms to your international agents and distributors. By providing an incentive to keep more of your products in their country’s supply chain, you’ll increase your market share and local brand recognition.
  • You can start doing business in countries you might otherwise perceive as too risky for payment terms by using Export Credit Insurance.

Credit insurance as a financing tool

  • Export Credit Insurance makes your business more attractive to banks, factoring companies, and other asset-based lenders. You can increase your borrowing capacity and obtain more favourable financing by including your insured foreign receivables in your collateral base. Insurance policy proceeds are assignable to the lender of your choice.
  • You will strengthen your balance sheet and keep your company’s financial position secure with Export Credit Insurance, despite exposure to unforeseen events, concentrations of foreign receivables risks, and changing international market conditions. Insuring your foreign receivables may also enable you to reduce your bad debt reserves.

Please check BECI’s website for further details on their products and how they could match your needs.

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