American exporters benefit greatly by partnering with a trade credit insurance company. Trade credit insurance helps businesses protect themselves against uncertainty in the international market. If you’re an exporter looking for some extra protection for your operations, there are a few key factors you should consider when it’s time to find a trade credit insurance company.
Policy Variety
Trade insurance functions in several ways, but its main function is twofold: to give you more flexibility to operate with confidence and protect your business from potentially catastrophic, unpredictable circumstances. Different types of trade insurance work in different ways:
- Export credit insurance. This protects against foreign buyer nonpayment and allows you to offer more attractive payment options to potential buyers. A seller’s payment terms are often one of the most important factors when foreign buyers consider making a purchase.
- Political risk insurance. Sometimes, a buyer may be willing but unable to pay for a shipment due to circumstances totally beyond their control. Political risk insurance protects your interests in the face of wars, revolutions, acts of terrorism, rioting, and having your goods appropriated by foreign entities.
Policy Terms
Unlike most insurance policies, trade insurance offers exporters some unique advantages:
- Flexible policies when you need them. With trade insurance, you can pay premiums when necessary without maintaining a constant policy. You can essentially purchase coverage when you need it and only pay your premiums when you use it. Short-term policies for single transactions are also available.
- Your policy terms can also help you cover multiple buyers in one policy instead of obtaining a policy for every transaction.
- Your trade insurance may also allow you to collect on open invoices through your lender immediately rather than waiting for the buyer to pay. You receive your funds from the lender minus any fees, and the buyer remits payment for the sale to the lender.
Trade insurance companies exist to help businesses grow, so it’s vital that you choose one with an established history of customer success. Look for the above factors when you start shopping for a trade credit insurance company to find the best fit for your organization’s needs. Drake Finance is committed to helping U.S. companies find success in the global marketplace and has a history of successes to show for it. Trust your instincts when the time comes to decide among trade insurance companies.
