Credit insurance plays a vital role in supporting credit management, the credit economy, and managing export credit exposure. It is important to create industry-wide awareness, enlighten people as well as credit management professionals about the benefits and how credit insurance protects businesses from non-payment risks, allowing them to manage their credit exposure more effectively, particularly the covering of due to buyer insolvency, protracted default, or political instability.
With credit insurance, businesses can access financing more easily. Insurers provide reassurance to lenders, enabling exporters to secure working capital and invest in their operations.
Credit insurance also supports cash flow stability and helps businesses maintain a predictable cash flow by ensuring timely payment for goods or services delivered. This stability enables exporters to plan and invest in their business operations with greater certainty, including a competitive edge by allowing them to offer more attractive credit terms to buyers. This can be a decisive factor in winning contracts over competitors who require advance payment or letters of credit.
On the other hand, export credit insurance protects exporters from non-payment risks associated with international trade. This covers losses due to buyer insolvency, protracted default, or political risks like war, nationalization, or currency inconvertibility.
With export credit insurance, businesses can explore new markets with confidence, enabling exporters to tap into previously untapped regions and take advantage of new business opportunities.
In this regard, Insured exporters can obtain more favourable borrowing terms from lenders, as the insurance reduces the lender’s risk. As taught by Professor Chris Onalo at the Postgraduate School of Credit and Financial Management (PSCFM), export credit insurance policies can be tailored to meet specific business needs and risk tolerance. Through an independent company credit report provider- such as Credit Business Services Global Ltd (CBS Credit) www.cbscreditglobal.com, Insurers conduct thorough credit checks on potential buyers, providing valuable insights into their financial stability and management reliability.
Typically, Insurers handle claims and may assist in debt recovery, reducing the administrative burden on exporters.
NO. 5
