Factoring Insurance
Insure before you buy receivables to minimize risk and get paid.
ECI’s Factoring Insurance protects banks or factors against non-payment on receivables they purchase from exporters without recourse.
A bank or factor can purchase a receivable from an exporter at a discount and pay the exporter the cash he needs. In case there is a default on the receivable, the bank or factor takes the loss. You can minimize this risk by insuring receivables before you buy them.
Key Benefits
You may be familiar with your export client but may have only superficial data on your client’s buyer, the party responsible for payment of the receivable. ECI’s Factoring Insurance allows you to buy receivables without recourse with confidence.
ECI is an AA- Fitch rated institution. By transferring credit risk from an unrated company to ECI, banks can substantially reduce the capital they must allocate to an asset.
ECI has a vast network of information suppliers and resources that can provide background information, payment experience, and financial data about nearly every company around the world. ECI can complete assessments at a fraction of what it can cost a bank and provide information from sources the bank has no access to.
ECI automatically transfers a percentage of each credit risk it takes to investment-grade reinsurers. ECI has the ability to take higher exposures than a bank can.
When you buy ECI’s Factoring Insurance, you also gain access to our global network of debt collection service providers. In case of default, we can help you collect outstanding receivables anywhere in the world at a fraction of the cost.
ECI has built up reserves that enable us to pay claims easily. In the case of default on a receivable, you can replace it with a replaceable against ECI instead of marking it as a loss.
ECI can take credit decisions faster than the typical banking process. Our vast resources with access to digital information, an advanced rating model, and specialized risk underwriters ensure a speedy process.
Product Features at a Glance
How It Works
Step-by-step Guide
The bank agrees on the terms and conditions of the insurance with ECI and signs the policy.
The bank applies for a credit limit on the buyer each time an exporter submits a request to discount the receivable.
ECI assesses each buyer and sets a limit. The limit is the maximum outstanding that is insured.
Once the limit is set, the bank purchases the receivable and knows that it is protected. If the buyer pays on time, there is no need to communicate with ECI. Once invoices are paid, the bank can purchase new receivables from any supplier without notifying ECI and they will be automatically insured up to the set limit.
Remember, this is a simplified guide. Each step can be tailored to suit the unique requirements of your business operations. Your financial security is our priority.
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Credit insurance is crucial for safeguarding your business transactions, especially when customers default on payments. Understanding the cost of this protection is vital for strategic planning. ECI offers a quick and easy way to calculate the annual cost of trade credit insurance tailored for your business.
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The bank will follow up on a payment as soon as a receivable is due. In case there is any doubt about the ability to recover the amount due, the bank should inform ECI. The bank will issue formal notice about an overdue payment at the date that is set in the policy schedule.
Once the bank informs ECI about a payment delay, ECI will activate the appropriate debt collection strategy. The bank ensures full cooperation with the exporter to collect all evidence related to evidence of exposure.
Once it is established that the receivable can’t be recovered, the bank will submit a claim along with evidence of loss and compliance with policy conditions.
After the claim has been submitted, ECI will assess the claim diligently, ensuring transparency and adherence to policy conditions.
Once the claim has been assessed, ECI will send the details of the calculation and ask for approval. Once it has been signed off, the claim payment will be promptly issued to the bank.
If there is still potential for recovery, ECI will work together with the bank and exporter to continue the recovery process even after the payout.
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