Credit insurance is an excellent tool to safely increase sales, to protect cash flow and support credit limit decisions, among other benefits.
Domestic Credit insurance and Export Credit insurance can both be purchased by a company, with the sole difference that Domestic Credit insurance covers credit sales to clients based in Brazil, whereas Export Credit insurance provides protection for exports to clients based abroad.
With respect to Export Credit insurance, however, we can point out other benefits that provide a greater added value to the operations of exporting companies that opt for the placement of this type of insurance.
In addition to contributing to the expansion of sales in markets that are already known and being served, Export Credit insurance is an important ally as it is instrumental in assisting companies to expand their business to unexplored markets. In view of the different particularities of each market, and of each region of the globe, it is difficult to guarantee safe sales conditions, and simultaneously gain competitivity. In this regard, Credit Insurance can provide this advantage, in so far as it eliminates the Letter of Credit requirement, and enables companies to offer longer payment terms to their clients.
Moreover, in the case of default, debt collection suits in another country can represent a significant cost in view of the need to hire a local law office or debt collection office. With Export Credit insurance, all lawsuits and recovery costs are borne by the insurer, and if the debt collection efforts are unsuccessful, the insurer indemnifies the company for the sum insured.
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Another important cover provided by Export Credit Insurance is the Political Risks cover. Extraordinary situations (payment moratorium and war, among others) can prevent the exporter from receiving payment transfers, even if the importer pays in his country. Therefore, Export Credit Insurance is an important ally in protecting the company operations against extraordinary events.
Credit insurance can be a very valuable tool to cover both domestic sales and export sales. Do contact us to understand how it can help your business.