American exporters must handle a great deal of uncertainty in the international market. While there are countless opportunities for success, foreign buyer insolvency is a huge obstacle – especially for new or growing export companies. In some situations, a foreign buyer may be unwilling or unable to pay for a sale, leaving the exporter at a loss. This can happen for any number of reasons, and export credit insurance can prevent it.
Why Export Credit Insurance?
- A foreign buyer may refuse to pay for a shipment. Perhaps they believe you misled them about the nature of the product or shipment, or the demand has simply dissipated and they don’t feel the need to pay for the shipment. Export credit insurance will help prevent situations like this from damaging your company’s viability.
- Forces beyond the buyer’s control could make them unable to pay. Political instability, such as wars, act of terrorism, revolutions, riots, coups, currency exchange rate issues, or other similar circumstance could render a buyer insolvent.
- Export credit insurance also allows an exporter to entice buyers with more attractive payment terms that may not have been options without the safety net of export credit insurance. If you mitigate the risk of loss, it becomes much easier to offer flexible purchasing options to foreign buyers.
In these situations, the exporter would have to take a loss on the shipment, and this can be disastrous for smaller companies. One lost shipment may be an irrevocable loss, forcing the exporter to close its doors. When American exporters partner with an export credit insurance company like Drake Finance, these worries diminish drastically, and business can continue with greater confidence. Contact Drake Finance for more information about export credit insurance and what it can do for your organization.