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Supplier Credit Guarantee

With a Supplier Credit Guarantee, a Danish company can offer the buyer abroad an extended credit period and thereby secure the order. The guarantee ensures that the company gets its money if the buyer defaults on payment.

  • Advantages of Supplier Credit Guarantee

    Advantages for you as an exporter
    You can help your buyer obtain extended credit for buying products from you. EKF pays compensation to you if the foreign buyer’s payments are not made as agreed.

    If your risk of loss is reduced to a minimum, you can feel confident about extending credit to your known buyers and to new customers where the risk is unknown. This gives you the peace of mind to extend your export markets to more remote countries.
    Advantages for you as a buyer of Danish goods
    You can get credit for up to 10 years. Thus, you can buy the products you want for your business to grow – as long as it is from a Danish company.
  • What is Supplier Credit Guarantee?

    ​If a Danish exporter wants to offer a buyer an extended credit period without the involvement of a bank, a Supplier Credit Guarantee ensures that it gets paid.

    If the buyer defaults on the agreed payments, the exporter receives compensation from EKF.
    ​The Supplier Credit Guarantee covers situations where the foreign buyer is unable or unwilling to pay, where the money cannot be transferred out of the country, and where war or civil war breaks out in the country.

    This minimises the risk to the exporter of granting the buyer credit.
  • How does Supplier Credit Guarantee work?

    ​EKF issues a guarantee to you to cover the risk of the credit being offered. By doing so, we take over the main part of the risk.
    ​With the backing of EKF, you will be able to offer your customer a credit. The customer can now afford to place an order with your company.
  • What does Supplier Credit Guarantee cost?

    EKF charges a premium for issuing a supplier credit guarantee.
     
    The premium is calculated on the basis of
    The buyer’s creditworthiness: EKF rates the buyer’s creditworthiness, i.e. the likelihood that the customer will pay. The higher the creditworthiness, the lower the premium.

    The political situation in the buyer’s country: EKF assesses the risk of political unrest in the buyer’s country. The lower the risk of political unrest, the lower the premium.
     
    The credit period: The credit period is the number of months the buyer will take to repay the credit. The shorter the credit period, the lower the premium.
    Three price examples
    The least expensive supplier credit guarantee costs 0.2% p.a. This would be for a buyer with an exceptionally good credit rating from a high-income country, such as Germany, the USA or Estonia. The credit period would be 181 days.
     
    In other cases, the premium is around 2% p.a. This would be for a buyer with a below-average credit rating from a country subject to certain political risks such as Azerbaijan. The credit period would be 5 years. 
     
    As we get closer to EKF’s risk threshold, the premium goes up to around 4.25% p.a. This would be the case for a country subject to major political risks such as Ukraine.
  • Terms & conditions regarding Supplier Credit Guarantee

    ​Who is eligible for a Supplier Credit Guarantee?
    Export companies who grant a buyer abroad credit for at least six months. EKF rate the foreign buyer as creditworthy before issuing any guarantee.
     
    What is the limit on a supplier credit guarantee?
    No limits are applied.
     
    What is the term?
    The term for a Supplier Credit Guarantee is up to 8.5 years in countries defined by the OECD as high-income countries, and up to 10 years in all other countries.
     
    If the buyer is from an OECD country or if the order exceeds EUR 5 million, the credit period must be at least 2 years.
     
    Conditions
    The foreign buyer is normally required to pay at least 15% of the order amount in advance if the credit period is more than 12 months. The credit must also be granted as a serial loan with principal repayments of equal size plus accrued interest.
    Environmental and social sustainability requirements
    EKF assesses the environmental risks and risks related to human rights in the transaction. The risk assessment is based on IFC standards and guidelines.

     

    What does EKF cover?
    EKF will pay compensation if the exporter makes a loss on an export transaction or investment abroad as a result of commercial or political risks.

     
    Commercial risk occurs in case of non-payment by the buyer due to liquidation, insolvency or cancellation of the contract.
     
    Political risk occurs when the exporter does not receive payment for products due to impediments in the foreign country. 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 the exporter. This means that as an exporter, your company must cover a deductible of at least 10%.

Advantages of Supplier Credit Guarantee

Advantages for you as an exporter
You can help your buyer obtain extended credit for buying products from you. EKF pays compensation to you if the foreign buyer’s payments are not made as agreed.

If your risk of loss is reduced to a minimum, you can feel confident about extending credit to your known buyers and to new customers where the risk is unknown. This gives you the peace of mind to extend your export markets to more remote countries.
Advantages for you as a buyer of Danish goods
You can get credit for up to 10 years. Thus, you can buy the products you want for your business to grow – as long as it is from a Danish company.

What is Supplier Credit Guarantee?

​If a Danish exporter wants to offer a buyer an extended credit period without the involvement of a bank, a Supplier Credit Guarantee ensures that it gets paid.

If the buyer defaults on the agreed payments, the exporter receives compensation from EKF.
​The Supplier Credit Guarantee covers situations where the foreign buyer is unable or unwilling to pay, where the money cannot be transferred out of the country, and where war or civil war breaks out in the country.

This minimises the risk to the exporter of granting the buyer credit.

How does Supplier Credit Guarantee work?

​EKF issues a guarantee to you to cover the risk of the credit being offered. By doing so, we take over the main part of the risk.
​With the backing of EKF, you will be able to offer your customer a credit. The customer can now afford to place an order with your company.

What does Supplier Credit Guarantee cost?

EKF charges a premium for issuing a supplier credit guarantee.
 
The premium is calculated on the basis of
The buyer’s creditworthiness: EKF rates the buyer’s creditworthiness, i.e. the likelihood that the customer will pay. The higher the creditworthiness, the lower the premium.

The political situation in the buyer’s country: EKF assesses the risk of political unrest in the buyer’s country. The lower the risk of political unrest, the lower the premium.
 
The credit period: The credit period is the number of months the buyer will take to repay the credit. The shorter the credit period, the lower the premium.
Three price examples
The least expensive supplier credit guarantee costs 0.2% p.a. This would be for a buyer with an exceptionally good credit rating from a high-income country, such as Germany, the USA or Estonia. The credit period would be 181 days.
 
In other cases, the premium is around 2% p.a. This would be for a buyer with a below-average credit rating from a country subject to certain political risks such as Azerbaijan. The credit period would be 5 years. 
 
As we get closer to EKF’s risk threshold, the premium goes up to around 4.25% p.a. This would be the case for a country subject to major political risks such as Ukraine.

Terms & conditions regarding Supplier Credit Guarantee

​Who is eligible for a Supplier Credit Guarantee?
Export companies who grant a buyer abroad credit for at least six months. EKF rate the foreign buyer as creditworthy before issuing any guarantee.
 
What is the limit on a supplier credit guarantee?
No limits are applied.
 
What is the term?
The term for a Supplier Credit Guarantee is up to 8.5 years in countries defined by the OECD as high-income countries, and up to 10 years in all other countries.
 
If the buyer is from an OECD country or if the order exceeds EUR 5 million, the credit period must be at least 2 years.
 
Conditions
The foreign buyer is normally required to pay at least 15% of the order amount in advance if the credit period is more than 12 months. The credit must also be granted as a serial loan with principal repayments of equal size plus accrued interest.
Environmental and social sustainability requirements
EKF assesses the environmental risks and risks related to human rights in the transaction. The risk assessment is based on IFC standards and guidelines.

 

What does EKF cover?
EKF will pay compensation if the exporter makes a loss on an export transaction or investment abroad as a result of commercial or political risks.

 
Commercial risk occurs in case of non-payment by the buyer due to liquidation, insolvency or cancellation of the contract.
 
Political risk occurs when the exporter does not receive payment for products due to impediments in the foreign country. 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 the exporter. This means that as an exporter, your company must cover a deductible of at least 10%.
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