How Trade Credit Insurance Keeps You Competitive

by | Mar 1, 2017 | Financial Services

Trade credit insurance gives businesses the ability to minimize risk and protect long-term goals. In a trade credit insurance agreement, lenders provide businesses with financial protection against nonpayment in import/export transactions. Consider trade credit insurance from Drake Finance as a way to build a competitive edge in an increasingly globalized marketplace.

How Does It Work?

In a trade credit insurance agreement, an insurance provider, such as Drake Finance, uses a network of risk evaluation resources to determine the financial viability of a selling business’s end clients. The insurer then uses the information to determine an insurability limit and accompanying premium amounts.

With the protection of an EXIM Bank-supported insurer backing the business, a seller can move into new markets, extend increased lines of credit, and grow its international export market share. Drake Finance, an EXIM Bank-approved lender, offers insurance products and provides cash flow advances to help export clients reach their goals. If a customer cannot pay, the EXIM Bank compensates sellers up to the terms of the policy.

Who Qualifies for Insurance?

Businesses of all sizes can access trade credit insurance if they meet certain standards for policy approval. To qualify, businesses may need to demonstrate profitability, domestic and/or international selling experience, and EXIM Bank-specified product/service requirements. All insurers require policyholders to register with Dun & Bradstreet for business credit purposes.

Benefits of Insurance

With a sound insurance policy minimizing the risk of international business ventures, sellers can:

  • Accept terms of sale for potentially high-risk buyers overseas.
  • Expand credit lines for increased gross profit per transaction and an increased number of transactions.
  • Grow quickly and enter new marketplaces without fear of insolvency.
  • Build lasting and profitable customer relationships.

One customer default can set a company’s growth strategy back months or years. Self-insurance requires cash reserves, and other arrangements, such as letters of credit may cost more than a company can feasibly afford.

In a time marked by trade uncertainty, insurance alleviates the stress of high-value global sales. Partner with Drake Finance to scale your global business and achieve sustainable growth goals. We look forward to discussing your current and future insurance needs. Reach out to us at (305) 854-0101 for more information.

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