What we often see is that many companies want to use credit insurance when starting to export. On the one hand, you want assurance about your new customer's creditworthiness before doing business. On the other hand, support is desired if a buyer fails to pay or even goes bankrupt. The larger credit insurance companies operate globally and can establish the credit risks of customers in most countries. They can also collect receivables locally in case of non-payment and, if that is not possible, compensate the insured supplier.
Payment problems
However, there is an additional risk in countries with increased political risk. These include South America, Africa and some countries in the Middle East and Asia. In these countries, although buyers may be creditworthy, payment problems may arise due to political circumstances. Examples include economic problems, foreign exchange shortages, war and political instability. As a result, payments to foreign suppliers may be unable to be made. This is not a fictional scenario; we have seen concrete examples of this recently. The war between Russia and Ukraine immediately created payment problems in Russia, Ukraine and Belarus. Another example is Argentina: several years ago, payments to foreign countries could no longer be made because Argentina had insufficient foreign exchange.
Great opportunities
In these countries, besides debtor risks, most credit insurers also insure so-called political risks. In the above situations, an insurer pays out the unpaid claim after a waiting period. This sometimes prevents years of waiting for a payment or even a permanent loss. Xolv is a member of the largest international network of credit insurance specialists and operates in most countries around the world. We support many exporting companies in insuring debtor and political risks. It is certainly useful to talk to Xolv's advisers about the possibilities for your company. Doing business in countries far away from the Netherlands does not have to be a problem, as long as you properly identify all risks and adequately cover them where necessary. Then it even offers great opportunities!
