Trade Credit Insurance
Trade Credit Insurance
Trade Credit Insurance is a strategic program available through a variety of underwriters in the U.S. and abroad to protect your company against buyer non-payment (for both domestic and international transactions). Reasons for non-payment could include credit and country related risks. The underwriters typically assume 90-100% of the risk at pricing often inthe range of .10-.75% of the annual sales underwritten. NaviTrade is an experienced specialist in this area, maintaining relationships with underwriters around the world – each with its own unique range of expertise. Additional details about these programs:
Trade credit insurance protects against political and commercial risks which cause defaults. Commercial risks are defined as buyer insolvency and/or protracted non-payment of your invoices. These problems could occur for many reasons, such as fluctuations in demand, natural disasters, or general economic conditions in your customer’s country. Political risks include war, civil strife, and revolution, as well as currency inconvertibility, government expropriation of a buyer’s assets, and changes in import or export regulations.
Fees/premiums are usually based on the terms you extend, the spread of buyer and country risks, and your previous transaction experience. The costs can be low – often times considerably less than the costs associated with letters of credit or the costs of increasing a company’s in-house credit & collections capabilities. Whether or not you pass this incremental expense on to your customers, the price of the coverage is insignificant compared to the additional business you can win by extending more competitive credit terms to your buyers.
NaviTrade’s clients include companies in almost all industries and involved in producing products or offering services including capital equipment, spare parts, raw materials, durable goods, consumer goods, commodities, services contracts, intellectual property and many other areas.
NaviTrade’s clients are involved in transactions/investments globally, including the following markets; North America, Central America, South America, Caribbean, Western Europe, Eastern Europe, the Pacific Rim, Southern Asia, Middle East, Africa, and other markets.
Overseas & Domestic Buyers
NaviTrade is regularly involved with facilitating the financing of client transactions involving overseas and domestic manufacturers, dealers, distributors, end-users, private companies, state-owned enterprises, government agencies, and quasi-public associations, and other groups.
In addition to protecting the riskiest part of your asset portfolio, credit insurance programs enable you to obtain more favorable financing by including your insured receivables in your borrowing base. NaviTrade’s clients can assign the rights to any claim payments by naming your bank as the loss / payee.
Extending Better Terms To Your Buyers
If your company has a successful track record with managing international and domestic sales, you can extend terms to your buyers based on your own internal procedures – or based on a set of user-friendly rules that comprise the program. Even if you are relatively new to extending terms in certain markets, programs can be established that will allow a company to set-up open account terms and larger credit limits to buyers in advance.
When a company’s efforts to collect from a past-due buyer are unsuccessful, a claim can be filed with the underwriter and payment will be pursued through international channels. Properly documented claims are typically paid quickly, even if recovery efforts are still in process.
Government and Private Sector Programs
NaviTrade maintains relationships with the premier trade credit & political risk underwriters in the United States. All of the programs that would be considered viable solutions for NaviTrade clients are fully backed by the U.S. government, foreign government agency, or top-rated commercial insurance companies (e.g., highly rated by A.M. Best, S&P, Moodys, or other rating agencies). Government programs usually cover the largest number of countries and include special features for small businesses and new exporters. Private sector programs generally offer greater flexibility and lower premiums. By maintaining a comprehensive knowledge of the available markets and providing the widest selection of coverages available, NaviTrade can custom-design your credit insurance program and keep it up-to-date as your business grows.
Multi-Buyer and Single Buyer Coverage
A company’s entire portfolio of domestic and foreign receivables can be covered under one multi-buyer program. The broader the spread of risk, the lower the cost. Single Buyer programs are available to cover a specific order or all of your sales to an individual customer. Multi-buyer program fees are paid monthly, quarterly, or annually based on your actual shipments, whereas single buyer programs are paid for in advance.
Short-Term and Medium-Term Programs
Coverage of sales on terms of 1 to 180 days, or up to one year for capital goods, is considered short-term credit insurance. All types of products and services are eligible for short-term coverage. Under medium-term programs, you or your bank can extend financing for one to five years to buyers of capital equipment, turnkey projects, and other large-ticket exports.
Many programs include non-acceptance coverage, which protects against a buyer’s failure to take delivery of your products. Pre-shipment coverage is available for customer-manufactured goods or items with long factory lead times. Additionally, consignment sales, shipments from a foreign warehouse, distributor floor plans, and equipment leases can all be structured as covered transactions.
NaviTrade’s objective is to develop an understanding of our client’s business and objectives, then strategically work to establish the right program for your needs. Within 2-3 weeks you can have a program in place that will dramatically, positively impact your global operations.