Supplier Credit Insurance
A Belgian exporter wants to grant extended payment terms to its foreign buyer, but still with coverage in case of termination or non-payment of the contract. Credendo – Export Credit Agency covers the exporter during the whole period against commercial and political risks
Filed under
Product benefits
- Competitive advantage for the Belgian exporter which can offer extended payment terms to the foreign buyer
- The exporter (and potentially the bank) is (are) sure to be paid
- Possibility to receive the cash payments earlier from the bank discounting those bills of exchange
Main characteristics
- The Belgian exporter wants to grant extended payment terms to its foreign buyer
- This credit is usually materialised by bills of exchange drawn by the exporter and accepted by the buyer
- The bank can potentially discount those bills, which allows the exporter to receive its cash earlier
- Credendo – Export Credit Agency insures the Belgian exporter against the termination and non-payment of the commercial contract during the whole period, as well as the discounting bank if needed
The Belgian exporter willing to offer extended payment terms to its foreign buyer, can ask Credendo – Export Credit Agency to cover the risks of termination and non-payment of the contract during this extended period, complying with OECD rules.
Eligible transactions are export contracts of capital goods or services with a min. 15% cash advance payment, and consequently a credit for max. 85% of the contract value.
This credit is usually materialised by bills of exchange (or promissory notes) drawn by the exporter and accepted by the buyer.
Repayment will happen in half-yearly or quarterly repayments (equal in principal but increased by a decreasing interest amount).
The exporter will be indemnified in case of termination or non-payment of the contract due to a buyer’s default, but also as a consequence of political risks.
The bills of exchange can also be discounted (refinanced) by the bank, with or without recourse against the exporter. In this case, the exporter will receive its cash payment after executing its part of the contract.
The bank will also be indemnified in case of non-payment due to a buyer’s default, but also as a consequence of political and similar risks.
Why Credendo?
Credendo - Export Credit Agency offers a complete range of products with the same goal: controlling risks related to foreign buyers in foreign countries. The ECA’s products are specifically destined for capital goods, services and contract works from Belgium. Not only Belgian exporters but also banks can make use of the products, which can also result in various financing solutions for the exporter and/or the foreign buyer.
Being the official Export Credit Agency for Belgium, Credendo – Export Credit Agency complies with OECD rules concerning the structure of export credits as well as the regulated premium percentage.
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