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TRADE CREDIT INSURANCE
Trade credit insurance is available from public and private sector underwriters. Generally such insurance
covers non-payment risk due to commercial events (insolvency and failure to pay) and/or political events (currency inconvertibility,
cancellation of import license, political violence, trade embargo, etc.)
With an effective trade credit insurance
program companies can:
1. Define the amount of risk compatible with corporate objectives and use that risk to obtain
competitive advantages
2. Expand sales opportunities and enter new markets by offering expanded account credit terms
3. Access financing, especially for export receivables
4. Manage risk more effectively through communication with
the underwriters and their extensive databases on customers and markets
The principals of Cross Border Financial
Services are licensed finance professionals and work effectively with all leading trade credit insurance underwriters.
MEDIUM-TERM INSURANCE
Cross Border Financial Services has been able to arrange medium-term financing through the use of medium term credit
insurance provided by public and private market underwriters.
Generally, medium-term is defined as having a term
greater than one-year and less than five years, but some markets may occasionally cover risks to 10 years.
WORKING CAPITAL FINANCING
Additionally,
Cross Border Financial Services assists the exporter in financing their working capital needs using a variety of products
and techniques:
1. Export-Import Bank Working Capital Guarantees
2. Lines of credit for insured accounts receivable
3. Off balance sheet limited recourse note purchase facilities
Because Cross Border Financial Services constantly
reviews trade finance options with exporters and financial institutions, we are often in a position to help an exporter obtain
the most flexible terms at the lowest cost.
By allowing Cross Border Financial Services to arrange export financing,
companies can use their limited resources to generate sales and profits.
For medium term sales (generally one
to five years) we can work either with the exporter or directly with the foreign buyer to provide financing.
Typically,
Cross Border Financial Services can work to obtain credit approval for the buyer and arrange non-recourse financing for the
exporter. The result is a cash sale for the exporter and low-cost term financing for the buyer.
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CROSS-BORDER LEASES
Leasing
in Emerging Markets is becoming an important tool in trade finance and Cross Border Financial Services LLC has developed extensive
experience and resources in utilising leases.
POLITICAL
RISK INSURANCE
Political risk insurance is used by equity investors and
financing entities to mitigate the effects of certain political events on investments and financing activities in foreign
markets. While political risk is a broad topic, insurance coverages are very specific. The Cross Border Financial Services
LLC helps clients design a political risk program that provides coverage against specifically identified risks such as the
ones outlined below:
Confiscation, Expropriation, Nationalization (CEN):Generally
protects investors and lenders from action by the host government that limit basic rights of owners and creditors in the insured
investment or loan. These governmental actions can either be direct, such as nationalization or confiscation, or they can
be gradual (creeping expropriation).
Currency Inconvertibility/Transfer Risk:Protects
against the inability to convert local currency into foreign currency and transfer it out of the host country. Often times
this coverage is combined with CEN coverage, but can occasionally be arranged separately.
Contract
Frustration: Protects against loss due to non-payment of a contractual obligation by a public (government owned) buyer
and a private buyer's inability to make payments due to certain political events in the host country. May also protect insured
from financial losses due to other specific contractual defaults by a public entity.
War
and Political Violence: Coverage against loss or damage to property and interruption of debt service caused by specific
events such as war, terrorism, etc.
Non-Repossession: Protects the insured's rights
to repossess and re-export assets including mobile equipment. Insures against actions by the host government to prevent the
insured from exercising those rights.
Other: There are a variety of other coverages
including "unfair calling of bonds", protection against loss due to trade embargoes and license cancellations.
INTERNATIONAL TRADE FINANCE
We have substantial experience in structuring and arranging the following types of financing for our
clients:
1. Purchase order and receivable financing
2. Non-recourse sale of notes
3. Forfaiting of medium-term
notes
4. Cross-border lease financing
5. Medium-term financing for capital goods
6. Islamic finance
7.
International customer financing programs
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