An exporter negotiating a new buyer relationship often concentrates on the selling price. Payment currency, delivery terms and the time allowed to pay can change the exposure as much as that price does. Credit insurance needs to be assessed against the actual sale.
A limit request should identify the legal buyer, trading country, peak outstanding balance and expected payment terms. It should also explain whether sales are invoiced directly, routed through a distributor or guaranteed by another entity. Those arrangements are not interchangeable for cover purposes.
Exchange-rate movements can affect the home-currency value of an outstanding receivable. A trade credit policy should not be assumed to provide currency hedging. Its basis of indemnity, currency and covered causes of loss need to be read separately from the company’s treasury arrangements.
The collection process matters across borders too. Evidence of delivery, acceptance and the debt can be essential when pursuing payment. Agreeing who retains those records and who reports an overdue invoice makes the insurance operational rather than simply another annual purchase.
Where this goes next
