What we do

Contract Guarantee

A Contract Guarantee protects you against loss if your company is unable to deliver a project to a foreign buyer due to conditions in the country or if the customer defaults on the contract. The guarantee covers the entire process from commencement of your project, through sub-deliveries and until you receive payment for the project.

  • Advantages of Contract Guarantee

    EKF pays compensation for your loss

    A Contract Guarantee covers a large share of the lost working capital tied up in your order and customer non-payment if your order is cancelled.

     

    Covers the entire process

    The guarantee covers the entire process from project commencement, through manufacturing of the individual sub-deliveries and until the customer has paid for the deliveries.

    Sales in less secure markets

    With a Contract Guarantee, you have no credit risk on the customer. This allows you to bid for major export contracts in markets where you would otherwise be unwilling to do business.
     

    Backed by the Danish government

    In the event of loss, the demand for payment against the foreign customer is backed by the Danish government. That makes a difference when claims are to be recovered.
  • What is Contract Guarantee?

    The Contract Guarantee is an insurance covering your loss if you have delivered part of a major project and are prevented from completing the project and receiving payment for it.

    The guarantee also covers your expenses pertaining to producing goods that you have not yet delivered, and your expenses pertaining to having equipment and machinery dismantled and shipped back home.

    For example, your company’s deliveries may be prevented by unrest in the country during which an embargo is imposed on exports to the country or the country’s authorities may prevent deliveries from being made.
    The guarantee also covers your loss if the foreign buyer is unable or unwilling to pay for the delivery. In our experience, Contract Guarantees are often used to insure projects such as construction of roads and port terminals or services such as drawings and design. 

    These are typically projects involving multiple sub-deliveries over the project period and where the buyer pays for each sub-delivery individually. Or projects in which your products are made to order for your specific buyer and cannot be sold to someone else.

    That way, a Contract Guarantee may help protect your exports against loss.
  • How does Contract Guarantee work?

    ​EKF will provide you with a guarantee for the payments and by doing so, we assume most of your risk.
    If things go so wrong, we will compensate you.
    ​Once you have security for payments, you can accept the order from your buyer with peace of mind.
  • What does Contract Guarantee cost?

    EKF charges a premium for issuing a Contract Guarantee.

    We calculate the premium on the basis of the overall risk of the specific export transaction:
     
    Industry analysis: EKF assesses the situation and the opportunities in your industry.
     
    Term of the guarantee: The term reflects the credit period of the guarantee. The shorter the term, the lower the premium.
     
    The buyer’s credit rating: EKF assesses the buyer’s credit rating, i.e. how likely that the customer will pay. The higher the credit rating, the lower the premium.
    Political conditions in the buyer’s country: EKF assesses the risk of political unrest in your customer’s country.
     
    Coverage amounts of less than DKK 25 million are based on EKF’s premium model. For amounts of more than DKK 25 million, EKF determines the premium on the export order on a case-by-case basis.
     

    Price example

    The price of a one-year Project Delivery Guarantee to a Russian buyer with the lowest acceptable credit rating is 1.5% of the risk amount for up-front payment.
  • Terms & conditions regarding Contract Guarantee

    Who is eligible for a Contract Guarantee?

    Danish export companies.
    EKF must rate the foreign buyer as creditworthy to issue a guarantee.
     

    Coverage limit

    No limit applies to the amount covered by a Project Delivery Guarantee.
     

    What is the term of the Contract Guarantee?

    The term depends on the term of the project, which may be short or long.
     

    Environmental and social sustainability requirements

    When your company's business with EKF totals more than DKK 25 million we assess your company's approach to the environment and human rights.
     

    What does EKF cover?

    EKF pays compensation if you make a loss on an export order as a result of commercial or political risks.
    Commercial risk occurs when that your buyer is unable to pay due to liquidation, insolvency or cancellation of the contract, or the buyer is unwilling to pay. Political risk occurs when you do not receive payment for products due to impediments in the country you are exporting to.
     
    Such impediments include war or civil war, currency shortage, restrictions on use of currency, import or export bans, and interventions by local authorities that make it impossible to receive payment for the products.
    As a rule, EKF pays a maximum of 90% of the loss in compensation to your company. Consequently, you have to cover a deductible of at least 10%.
     
    A Contract Guarantee covers these specific losses:
    - Expenses to date less earnings from sale of the manufactured products
    - Expenses pertaining to dismantling equipment and shipping it back to Denmark
    - Invoices which the buyer has not yet paid

Advantages of Contract Guarantee

EKF pays compensation for your loss

A Contract Guarantee covers a large share of the lost working capital tied up in your order and customer non-payment if your order is cancelled.

 

Covers the entire process

The guarantee covers the entire process from project commencement, through manufacturing of the individual sub-deliveries and until the customer has paid for the deliveries.

Sales in less secure markets

With a Contract Guarantee, you have no credit risk on the customer. This allows you to bid for major export contracts in markets where you would otherwise be unwilling to do business.
 

Backed by the Danish government

In the event of loss, the demand for payment against the foreign customer is backed by the Danish government. That makes a difference when claims are to be recovered.

What is Contract Guarantee?

The Contract Guarantee is an insurance covering your loss if you have delivered part of a major project and are prevented from completing the project and receiving payment for it.

The guarantee also covers your expenses pertaining to producing goods that you have not yet delivered, and your expenses pertaining to having equipment and machinery dismantled and shipped back home.

For example, your company’s deliveries may be prevented by unrest in the country during which an embargo is imposed on exports to the country or the country’s authorities may prevent deliveries from being made.
The guarantee also covers your loss if the foreign buyer is unable or unwilling to pay for the delivery. In our experience, Contract Guarantees are often used to insure projects such as construction of roads and port terminals or services such as drawings and design. 

These are typically projects involving multiple sub-deliveries over the project period and where the buyer pays for each sub-delivery individually. Or projects in which your products are made to order for your specific buyer and cannot be sold to someone else.

That way, a Contract Guarantee may help protect your exports against loss.

How does Contract Guarantee work?

​EKF will provide you with a guarantee for the payments and by doing so, we assume most of your risk.
If things go so wrong, we will compensate you.
​Once you have security for payments, you can accept the order from your buyer with peace of mind.

What does Contract Guarantee cost?

EKF charges a premium for issuing a Contract Guarantee.

We calculate the premium on the basis of the overall risk of the specific export transaction:
 
Industry analysis: EKF assesses the situation and the opportunities in your industry.
 
Term of the guarantee: The term reflects the credit period of the guarantee. The shorter the term, the lower the premium.
 
The buyer’s credit rating: EKF assesses the buyer’s credit rating, i.e. how likely that the customer will pay. The higher the credit rating, the lower the premium.
Political conditions in the buyer’s country: EKF assesses the risk of political unrest in your customer’s country.
 
Coverage amounts of less than DKK 25 million are based on EKF’s premium model. For amounts of more than DKK 25 million, EKF determines the premium on the export order on a case-by-case basis.
 

Price example

The price of a one-year Project Delivery Guarantee to a Russian buyer with the lowest acceptable credit rating is 1.5% of the risk amount for up-front payment.

Terms & conditions regarding Contract Guarantee

Who is eligible for a Contract Guarantee?

Danish export companies.
EKF must rate the foreign buyer as creditworthy to issue a guarantee.
 

Coverage limit

No limit applies to the amount covered by a Project Delivery Guarantee.
 

What is the term of the Contract Guarantee?

The term depends on the term of the project, which may be short or long.
 

Environmental and social sustainability requirements

When your company's business with EKF totals more than DKK 25 million we assess your company's approach to the environment and human rights.
 

What does EKF cover?

EKF pays compensation if you make a loss on an export order as a result of commercial or political risks.
Commercial risk occurs when that your buyer is unable to pay due to liquidation, insolvency or cancellation of the contract, or the buyer is unwilling to pay. Political risk occurs when you do not receive payment for products due to impediments in the country you are exporting to.
 
Such impediments include war or civil war, currency shortage, restrictions on use of currency, import or export bans, and interventions by local authorities that make it impossible to receive payment for the products.
As a rule, EKF pays a maximum of 90% of the loss in compensation to your company. Consequently, you have to cover a deductible of at least 10%.
 
A Contract Guarantee covers these specific losses:
- Expenses to date less earnings from sale of the manufactured products
- Expenses pertaining to dismantling equipment and shipping it back to Denmark
- Invoices which the buyer has not yet paid
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