Questions and Answers
Q- What is Export Credit Insurance?
A- Export Credit Insurance is a financial tool that reduces the risk of an unexpected credit loss. It is on insurance policy that runs for 12 months, and covers losses on goods exported during the policy period. Thus Export Credit Insurance offers cover against non-payment by an exporter's foreign buyers for goods or services supplied to them.
Q- How can a policyholder assists ECGA in processing credit limit application more quickly?
A- First, the amount of your credit limit application should be realistic and close to your probable requirements in the foreseeable future. Second, the policyholder should provide ECGA with full and correct details of the buyer 's trading style, address and the name and address of his banker. Third, it is important that the policyholder gives the full and actual details of previous trading experience with the buyer, if any. Fourth, if the policyholder has up-to date credit information on the buyer he can attach such reports together with any other additional information to the application.
Q- When and how should I inform the Agency when the buyer delays payment?
A- Immediately any payment becomes two months outstanding, or when you notice the buyer has encountered financial problems, or when you hear an adverse information about the buyer. You can inform ECGA by phone or by any other means which are convenient to you such as E-mail and fax.
Q- Are cancelled credit limits applicable to outstanding debt?
A- Cancelled credit limits continue to apply to outstanding debt in respect of shipments made prior to date of cancellation, but not for future shipments.
Q- To remain fully insured is it necessary for me to limit the value of my contract to the precise value of the credit limit agreed by the Agency?
A- Not at all. On a large contract, you may for example be able to spread your dispatches so that the amount outstanding for goods exported is, at any one time, within the approved limit. This means you can undertake contracts of a value greater than that given of your credit limit, since it is revolving.
Q- What is @ rating Quality Label?
A- Coface – the French Export Credit Insurance Corporation has established the @ rating quality label which evaluates the ability of the companies to honor their commercial commitments. It enables you to certify the security offered by your company to your commercial and financial partners. Coface Group in association with the Export Credit Guarantee Agency launched @ rating in Oman in March 21, 2001.
Q- What are some of the advantages of @ rating?
A- Among the advantages of @ rating is that it allows to make your customers and suppliers aware of your company’s absolute reliability and credibility as well as inspire confidence of your trading partners on business transactions worldwide. Thus @ rating provides your company with an indispensable global certification.
Q- How can I avail @ rating?
A- You can avail @ rating by contacting ECGA for necessary information and application form or through its website at http://www.ecgaoman.com which is linked with www.cofacerating.com.
Q-What are the risks that are not covered by ECGA ?
A- ECGA will not cover disputes between the buyer and the exporter regarding the supply e.g. quantity, packing, etc, unless the policyholder gets a court ruling in his favor, causes inherent in the nature of goods, default of any agent of the exporter or of the collecting bank, fluctuation in the exchange rate.
Tips to Exporters
Credit insurance allows the exporters ability to pledge export receivables and insured purchase orders as collateral for working capital financing with the commercial banks.
By insuring your export business with ECGA, the policy provides necessary protection from protracted default, non-acceptance of the goods as well as insolvency of the buyer as well as non-commercial risks.
Credit insurance allows you as an exporter to secure a more competitive market position by offering aggressive open credit terms that can enhance the ability to meet a buyer’s need. This is because as competition in the marketplace heats up, more and more companies demand open credit. By utilizing credit insurance to hedge the risk of loss, exporters can extend open credit that will permit foreign buyers to more easily purchase the quantity of product that they truly desire. Hence credit insurance is very essential to exporters and others in extending liberal terms of payment to buyers such as open account.
Issue No. 3/2001
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