Fresh export opportunities thanks to credit insurance

Winning an export contract is hard enough. But failure to receive payment is a serious blow.

The loading scene of a cargo plane.
Having an insurance is crucial for a successful export business.

About 2% of the invoices issued in Switzerland are never paid by their debtors. Promises to pay are not kept and after the agreed payment deadline has passed, the suppliers themselves are left standing with their payment obligations such as salaries, purchases of goods, transportation costs, etc., and cannot meet their own obligations owing to insufficient liquidity. A vicious circle takes its course, until one company collapses, taking others with it in a domino effect.

Deliveries on credit, so-called supplier credits, are short-term credits that arise through the granting of a payment goal on open account after having already delivered the goods or service. The advantages for the debtor (purchaser) are only too obvious and it is not surprising that this is the most popular form of credit; it is available as soon as the debt arises. The debtor need not enter into any contractual financial obligations with a bank, and so avoids the associated formalities of a credit check. The credit is also interest-free. So it's understandable that customers prefer to buy on open account. The longer, the better.

So why shouldn’t I, the supplier, meet this customer preference and turn it into my competitive advantage? After all, if I manage to eliminate the payment default risk, this payment type is well worth considering.

You’ve long wanted to grow your turnover, attract certain customers, or enter new markets? Is your product so unique that it’s an easy sell? Then you can set the rules as to how you want the payment arrangements to function. The purchaser will go along with you as he wants your product.

Or do you have a product that is available elsewhere? What advantage could you gain to move ahead of the competition? The price? Sure, that has to be right. But then you’ll have to discuss the terms of payment. You’d definitely prefer to stay on the safe side with payment on account or cash payment, or a payment guarantee, or a letter of credit, perhaps a retention of title too? Do you think that these conditions will strengthen your negotiating position in a competitive market or that they can give you a competitive advantage or generate the necessary trust, forming the basis of a business relationship? Do you think you can enter into new business relationships in this way? Hardly.

On the other hand, with the security of credit insurance (also known as loss of receivables insurance, accounts receivables insurance, commercial credit insurance), you can grant this level of trust. Why? Because the insurance checks your potential business partner in advance and finds out if he can meet his obligations. Discreetly and respectfully, with the help of our network of information sources. If, against expectations, he fails to meet his obligations, the insurance carries out the debt collection, regardless of the amount or location. But this still doesn’t guarantee payment. Hence, the credit insurance pays compensation for the unpaid invoice following a short, pre-set waiting period.

Progressive companies - the market leaders in any case – conduct their business exploiting this advantage. Credit insurance offers the ideal system to stay informed and well-equipped. But also to recognize and exploit opportunities, take risks in the right places, share responsibility, and to make calculations: Because not everything is as good as it looks at first sight. Many things are significantly better!

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