To implement a contract with foreign customers, the exporting companies may require bank guarantees and/or credit financing.
The guarantee of the guarantors, as the pre-financing is valuable to conquer markets outside the borders. Managed by Coface, these two public guarantees, also called “risk insurance exporter” is based on a tripartite relationship : the exporter, the banker and the foreign buyer. Here’s how they work.
1. The warranty guarantees
Take the case of an exporter entering into a sale of a material with an overseas buyer, who wishes to ensure the financial strength of its “provider” and the delivery of his order.
“The guarantee of the guarantors will facilitate the issuance of guarantee commitments in the framework of contracts, export, and to secure the bank against the risk of financial failure of the exporter,” says one to the Coface.
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The issuers of securities – banks and insurance companies – acting as a financial partner of the exporter, can benefit from this guarantee.
In practice, the exporter files an application envelope to guarantee corresponding to the guarantee to be issued for a commercial operation to export. And this, pointing to his financial partner, who signs a policy of insurance. If the exporter achieves a turnover less than or equal to € 150 million, Coface will guarantee the financial partner to the tune of 80% of its deposit. If it achieves a turnover of more than 50%, then the guaranteed proportion reaches a maximum of 50%.
Thus, for example, an exporter with a turnover of eur 150 million, concluded a sale of 10 million euros with a foreign customer. The exporter obtains from the bank a deposit of 10 million euros. The bank guarantee this guarantee from Coface.
In the event of a bankruptcy of the exporter, the foreign client will be covered by the bank guarantee of 10 million euros and the bank will be reimbursed for up to 80% by the guarantor, or 8 million euros.
2. The guarantee of pre-financing
instead of covering the proper delivery of the order as the guarantee of the guarantors, the pre-financing provided to the exporter, the financial means to “make” their order and deliver it to you. If the deposit received from the foreign buyer is not sufficient to launch the manufacturing of a machine for example, it will ask for a credit for pre-financing its bank. A charge for the latter to be guaranteed by Coface. Quotas maximum guarantees are equivalent to those of bonds. The assurance process.
In these two safeguards, there is no premium charged to the exporting firm. The financial partner – a bank or insurance company rule at the Coface, a premium calculated on the amount of the guarantee, its duration and a rate of premium.
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