Export credit insurance for exporting firms provides protection for nonpayment or refusal of shipments by customers abroad. It can also protect exporters from customers who become insolvent. For firms new to exporting, this insurance allows firms to establish themselves in an overseas market by mitigating certain risks. This permits the firm to confidently offer more competitive credit terms for potential buyers.
Export Credit Insurance is a non-performing letter of credit used as assurance of buyer payment in international transactions. If the seller does not receive payment on time, the letter of credit is cashed on demand by the seller. This letter can be canceled when the terns of the contract have been satisfied.
