Risk management is always a priority in global trade. Trade credit insurance is one protection that many companies, particularly small business exporters, rely on to reduce their commercial and political risk when selling internationally, by allowing customers to buy on open account. While a letter of credit is preferable when exporting goods to a buyer abroad, it is not always attainable as this guarantee of payment can be expensive. With open account terms, buyers can accept shipments and pay for them later. To alleviate the risk of such an arrangement, trade credit insurance guarantees compensation of (typically) 90%-100% of the amount owed. The first instances of trade credit insurance use date back to the 1800s, but the practice rose to prominence in Western Europe during the 1920s and 1930s, not coincidentally an era of substantial political upheaval. Europe remains the hub of the trade credit insurance market, but industry consolidation over the decades has resulted in just three companies now controlling more than 80% of the global market: Euler Hermes, Atradius and Coface, which is part of the Natixis group. Trade credit insurance has been a beneficiary to global trade, but these days it is also used in domestic trade practices, where it provides the same coverage and protections. This has allowed companies to broaden their customer base by making open account terms more widely available. And because a company’s accounts receivable from exports are insured, these accounts can also be used as collateral for businesses seeking bank loans or credit lines. Variations in policy types are available, including coverage that can be canceled at the insurer’s discretion, or that cannot be canceled during the policy period.
ITFA Takes A Harmonized Step Towards Trade Credit Insurance
The ITFA (International Trade and Forfaiting Association) recently released a new initiative in the form of a Basel III-compliant trade… Read More
Coface: Growth in World Trade Stronger Than Anticipated
Global trade credit insurer Coface released its quarterly economic outlook and map for country and sector risk. World economic growth… Read More
Eastern European Outlook
For companies doing business in Eastern Europe, the outlook looks positive on the surface. Countries in the region are seeing… Read More
Canadian Bank Act Regulations Anticompetitive for Canadian Business
Since 1992, Canadian financial institutions, regulated by the Canadian Bank Act, have had the ability to recommend and promote export… Read More
The Hidden Impact of Lower Oil Prices
The economic stagnation from low oil prices is affecting liquidity conditions across Gulf Cooperation Council (GCC) countries, according to a… Read More
Coface: Payment Risks on the Rise in APAC
Coface’s annual survey traces the evolution of corporate payments in eight countries and 11 sectors in the Asia Pacific (APAC)… Read More
Latin America: The Winners and Losers of Trumponomics
Global credit insurer Coface released a report outlining possible outcomes of US trade policies for the region, focusing on exchange… Read More
Coface: Recovery Continues in Europe, Uncertain in US, Elusive in China
Global trade credit insurer Coface released its quarterly economic outlook and map for country and sector risk. The ongoing recovery… Read More
Business Confidence Is Picking Up, Despite Political Risk
Global trade credit insurer Coface released its quarterly economic update for country and sector risk. The main surprise of early… Read More
Coface Country Risk Outlook 2017
Global trade credit insurer Coface released its 2017 forecast for the global economy and the quarterly update to its assessments… Read More
Propelling Exports Through Trade Credit Insurance
HOW AIR TRACTOR AND OTHER COMPANIES ARE WORKING WITH THE EXPORT-IMPORT BANK OF THE UNITED STATES When Trilithic, Inc., an… Read More
« Previous 1 2 3 Next »