Understanding how complicated and risky the global trading environment can be for U.S. shippers of all sizes and across all industries, DB Schenker is introducing a new product that will help companies expand into new international markets—and work with overseas trading partners—with confidence. Using Export Credit Insurance, U.S. exporters can effectively protect themselves against the risk of non-payment by foreign buyers.
“DB Schenker is an approved broker for the United States Export-Import Bank (EXIM), which provides Export Credit Insurance for small to mid-size companies,” says Stephen Gifford, DB Schenker’s Vice President of Risk, Insurance & Trade Advisory Solutions.
What is Export Credit Insurance?
According to EXIM Bank, Export Credit Insurance protects an exporter’s accounts receivable and gives businesses the confidence necessary to enter new markets and chart a path forward with margins they can depend on. “With this security in hand, companies can increase their global competitiveness by offering credit terms needed to win sales,” the bank states. “Moreover, EXIM support empowers exporters to overcome cash flow obstacles by borrowing against their insured receivables.”
Credit insurance also gives shippers the power to:
- Extend credit terms to foreign customers
- Insure against nonpayment by international buyers
- Cover both commercial (e.g., bankruptcy) and political (e.g., war or the inconvertibility of currency) risks
- Arrange financing through a lender by using insured receivables as additional collateral
- Safeguard against catastrophic losses from buyer nonpayment.
- Offer buyers the credit necessary to expand into new markets and boost sales with existing customers
- Accelerate cash flow by borrowing against foreign receivables
- Ease the burden of credit risk management by leveraging EXIM’s international expertise
Significantly Reducing Payment Risks
In today’s business world, supply chain professionals generally lack the experience needed to make effective insurance decisions that help offset supply chain risk. Relying on carrier liability programs, organizations often come up short when items are damaged, lost, or destroyed. By working with partners like DB Schenker, they can more quickly identify critical supply chain risk and either avoid or mitigate those problems.
Knowing that even creditworthy buyers could default on payment due to circumstances beyond their control, DB Schenker’s Export Credit Insurance lets U.S. exporters offer competitive, open account terms to foreign buyers while at the same time minimizing the risk of non-payment. And with that reduced non-payment risk, exporters can increase export sales, establish and expand market share, and compete more vigorously in the global market, according to the U.S. Department of Commerce.
According to the U.S. Department of Commerce’s Trade Finance Guide, Export Credit Insurance significantly reduces the payment risks associated with doing international business by giving the exporter conditional assurance that payment will be made if the foreign buyer is unable to pay.
Export Credit Insurance also covers currency inconvertibility, expropriation, and changes in import or export regulations. The coverage is offered either on a single-buyer basis or on a portfolio multi-buyer basis for short-term and medium-term repayment periods.
Gifford concludes, “This gives shippers an excellent way to protect their financial interests, and ensures that their foreign receivables are paid for their products sold overseas.”
DB Schenker’s Export Credit Insurance is available immediately. For more details visit our website.