Export credit insurance provides cover for your business if a customer owes you money for your services or goods. This is with a specific focus on overseas trading. If you are looking to expand your exporting business, you need to make sure that you have the right kind of insurance in place to mitigate the risks associated with exporting.
Exporting is so unpredictable and can suffer from things such as political risks, currency transfer issues, civil unrest, debt recovery, unpredictable tariffs and language customs. You can mitigate these risks with the right cover in place, which is why it’s important to seek the advice of a credit insurance broker who can help you make an informed decision on what insurance you need.
With that being said, let’s take a look at some of the benefits of export credit insurance and how it can help your business expand.
Expanding into new markets
Export credit insurers can help customers manage exporting risks by offering expertise and guidance, which should help them expand their business into new markets. They do this by supporting your overseas growth and giving you the confidence to offer credit insurance terms to international customers.
With there being less risk of expanding into new markets when you employ the services of export credit insurers, there is no reason to not give it a try.
Boost sales
When you have an extension of credit terms, it could influence existing customers to purchase more of your products or services. This is because your business instantly becomes more reputable and trustworthy when you have the proper credit terms in place to keep yourself protected.
Having a safety net to fall back on with the management of receivable foreign accounts, allows you to take advantage of the opportunities and increase the sales gained by the business. This type of insurance can also help by easing the burden of credit risk management and allowing you to focus on other aspects of your business, such as finding different ways that you can boost overall sales.
Better financing opportunities
Attempts to lend money from the bank for exporting are usually rejected. With export credit insurance, there is more chance that your bank will lend the money you need for exports and against receivable foreign accounts. This is because they have more backing to do so.
UKEF export insurance will cover businesses and sectors that have the relevant export licences and allow them to increase the amount that can be borrowed, making the financing terms more attractive as a whole.
Tax benefits
Financial departments are one of the most important parts of a business, as they must account for loss reserves. Export credit insurance can reduce loss reserve, as foreign customer nonpayment can easily be compensated. This will lower your business’s tax burden.
If you have to tackle the British Tax System, you will know that there are many types of taxes that you can see benefits of from export credit insurance. This includes corporate tax, inheritance tax and value added tax.
Competitive advantages
Having export credit insurance can provide strong competitive advantages. It gives the leeway for you to offer better pricing for goods and services to international customers. This will increase the chances of your businesses gaining more regular buying from overseas, as you become more attractive to them. This is great for market share.
Export credit insurance can also help businesses stay competitive in the market by offering open terms when the only safe option previously would have been prepayments. Open terms can significantly increase the number of sales for your business, according to the World Trade Organisation.
