One of the most popular products offered by SERV Swiss Export Risk Insurance is supplier credit insurance. It protects companies in various industries from the risk that foreign buyers will default on payments owed under export contracts – from multinational machinery manufacturers to small consumer goods suppliers.
Margot Fromages SA in Yverdon, for example, specialises in aging cheese and exporting origin-certified cheeses such as Gruyère, Appenzeller, Tête de Moine and Emmentaler. For over ten years, the family-owned Vaudois company has been supplying a general dairy importer in Russia. Until recently, it always demanded full payment in advance. Last year, however, the Russian importer doubled the amount of cheese it ordered from Margot for a total order volume of CHF 4.8 million.
This was great news for Margot – but it came with a new challenge. Since it had increased its order volume, the Russian importer was no longer willing to pay the full amount in advance. Despite several rounds of negotiations, it would only agree to pay 50 per cent in advance for the twelve monthly shipments. However, the small cheese aging firm simply could not bear the risk of a default on the other half of the payment. A failure or delay of payment would have strained its coffers too much.
Instead, Margot Fromage turned to SERV for help in 2012. SERV covered the remaining CHF 2.4 million with a supplier credit insurance policy. This allowed the Swiss exporter to serve its Russian customer without taking on excessive risk.