Export factoring insurance

To defend the interests of commercial banks financing exporters against the transfer of monetary claim, Eximgarant of Belarus has introduced an unprecedented insurance product — the insurance of direct export factoring.

At the same time, financing against the transfer of monetary claim against the overseas contractor bears a high credit risk for a number of objective reasons, such as the problem of proper assessment of the importer’s credit worthiness, the procedure of collecting accounts receivable, granting long-term commodity credit to exporters, taking into consideration the time needed to supply goods to foreign markets, political instability and the existing legislation in the importer’s country, etc.

Voluntary insurance of international factoring is aimed at protecting the bank from the risk of non-fulfilment by the overseas debtor of monetary obligations under the export contract, in case the monetary claim thereunder has been transferred according to the contract of international factoring, due to events involving political or commercial risk.

Insuring the contract of international factoring with Eximgarant of Belarus allows to avoid high costs of reducing risks related to the deal involving costly banking instruments: letters of credit, cooperation with overseas banks and factoring companies (import-factors). Being entitled to an insurance compensation, the bank doesn’t have to handle the problem of collecting outstanding accounts receivable abroad, whereas the insurant bears all the related costs.

Voluntary insurance of international factoring allows as well to provide insurance cover in case the exporter is financed against the transfer of monetary claim with the right of recourse.

The cooperation with Eximgarant of Belarus lifts a number of restrictions and requirements on the allocation of special reserves to cover potential asset loss, which makes more resources available for performing active operations of the bank.

Apart from that, the insurance cover presupposes the risk management and the analysis of the financial and legal aspects of the export deal based on Eximgarant of Belarus’ ten-year experience in insuring foreign trade projects of Belarusian enterprises with a wide geographical span of supplies. Our cooperation ensures collegiate and objective consideration of the opportunities to finance a particular project and of the conditions on which the resources can be provided.

The insurance of export factoring will allow the bank to demonstrate a comprehensive approach to the work with clients: it will give an opportunity to provide resources against the transfer of claim for all projects of the exporter, even if the degree of credit risk is too high for the bank. Consequently, the insurance cover provided by Eximgarant of Belarus will encourage the development of the export financing mechanism, ensuring the efficient participation of exporters in international trade owing to granting credit resources operatively and on favourable terms, which eventually consolidates our country’s export potential on the whole.

Direct export factoring without the right of recourse

The procedure of interaction:

1. request for factoring;
2. submitting the information on debtors to Eximgarant of Belarus;
3. eximgarant of Belarus’ preliminary conclusion on the possibility of insurance;
4. contract of factoring;
5. insurance contract;
6. shipment of products under the export contract;
7. transfer of claims;
8. financing;
9. payments as provided by the export contract.

10. payment of the insurance compensation to the bank, transfer of the right of claim to Eximgarant of Belarus;
11. raising claims against the overseas buyer.

Direct export factoring without the right of recourse

The procedure of interaction:

1. request for factoring;
2. submitting the information on debtors to Eximgarant of Belarus;
3. eximgarant of Belarus’ preliminary conclusion on the possibility of insurance;
4. contract of factoring;
5. insurance contract;
6. shipment of products under the export contract;
7. transfer of claim;
8. financing;
9. payments as provided by the export contract.

10. recourse
11. payment of the insurance compensation to the bank, transfer of the right of claim to Eximgarant of Belarus:
    1. raising claims against the exporter;
    2. raising claims against the overseas buyer.

The list of documents required for the conclusion of an insurance contract:

• application for the conclusion of an insurance contract;
• the insurant’s title deeds (provided that it is the first insurance contract concluded with this insurant);
• constituent documents, certificate of registry, the card containing specimen signatures and imprint stamp;
• the debtor’s documents:
  • constituent documents, certificate of registry, certificate of tax registration;
  • the debtor’s financial documents and statements of accounts as of the last reporting date, other evidence of the debtor’s solvency;
• creditor’s documents (in case of factoring with the right of recourse):
  • constituent documents, certificate of registry, tax registration certificate;
  • the creditor’s financial documents and statements of accounts as of the last reporting date, other evidence of the creditor’s solvency;
  • contract of international factoring;
• documents concerning the monetary claim transferred:
  • export contract, specifications, invoices, shipping documents, acts of delivery and acceptance of goods (works, services).