Guidance

Export finance and insurance - an overview

Find out about UK Export Finance products and services, and how export credit guarantees can help your business.

When an exporter gets an order to supply goods or services to a buyer overseas, it can ask to be paid upfront - at the time the buyer places the order, or before the goods and services are delivered if the exporter needs time to make the goods.

This is a safe way of exporting because the exporter knows it will get its money before the goods or services are delivered.

However, this approach might also mean the exporter will not enter into as many export contracts as it could because its buyers may require time to pay, ie credit terms. Most buyers these days need credit from their suppliers.

For example, a buyer might be unwilling to place an export order unless it is allowed to pay for the goods or services only when they have been delivered.

This means that the exporter has to offer credit for 30, 60 or 90 days, or however long it takes for the goods to arrive, before the buyer will pay and the exporter will receive payment.

In fact, most exports from the UK are sold on short credit terms, usually up to 180 days. 



Credit: potential problems for exporters

When an exporter gives credit to its buyer it faces 2 particular problems:

  1. It has to wait for its money - this affects its cash flow.

  2. It is exposed to the risk that the buyer won’t or can’t pay for the exports - for example, between the time the exporter ships the goods and them arriving at the buyer’s premises, the buyer may have gone bankrupt and be unable to pay. This could then lead to the exporter becoming insolvent if it involved a large sum of money.

Exporters can go to their bank or to specialist financial organisations to help them get finance, and to credit insurers to get insurance against the risk of not being paid. But if some exporters are unable to get help from these private sources, UK Export Finance may be able to assist.

Who UK Export Finance supports

In recent years we have supported business in the aerospace, automotive, construction, healthcare, industrial processing, oil and gas, petrochemical, water treatment, and satellite sectors.

We can consider support for all exporters, large and small, and all types of UK exports (goods and/or services). UK Export Finance cover is available for most overseas markets.

Check our country cover policy and indicators to find out what cover is available for the country you want to do business in.

Which UK Export Finance products are right for your business?

The following products are available through an application to UK Export Finance. Applications for loan guarantees will need to be supported by a financing bank.

Credit insurance

This is to insure against the commercial and political risks of not being paid under an export contract. UK Export Finance can also provide insurance protection to exporters against the unfair calling of contract bonds.

We do not typically provide export insurance cover:

  • for exports to any EU country (except Greece) and certain countries (Australia, Canada, Iceland, Japan, New Zealand, Norway, Switzerland and the United States of America) belonging to the Organisation for Economic Co-operation and Development (OECD) where the manufacturing period under that contract plus any period of credit given to the buyer total less than 2 years
  • unless it can be demonstrated that cover is unavailable from the private sector

Overseas investment insurance

Overseas investment covers investors against losses on overseas investments arising from political risks.

Loans or loan guarantees to banks

Medium and long-term loans to finance UK export contracts.

In some circumstances, we may be able to to support a Buyer Credit with the Export Refinancing Facility.

Schemes available through banks

The following UK Export Finance schemes are available through an application to a participating bank, and are designed to make it easier for exporters to manage their working capital and cash flow.

If you are finding it difficult to get the support you need from your bank, we would encourage you to suggest the use of these schemes to your bank and, if necessary, contact UK Export Finance directly.

Bond support

This offers support to banks issuing advance payment, progress payment or other contract bonds in relation to UK exports.

Working capital support

For banks providing working capital loans to UK exporters.

Letter of credit guarantees

These are given to confirming banks against the risk of not being reimbursed by overseas bank issuers of letters of credit in favour of UK exporters.

Cost of UK Export Finance products and services

UK Export Finance charges premium on transactions on a case-by-case basis.

For the Letter of Credit Guarantee, Bond Support and Export Working Capital schemes the guaranteed bank pays us a guarantee fee, which is typically a proportion of the fee which the bank receives from the exporter for providing the facility in question. We do not charge the exporter a separate fee.

Consideration of applications

Read about the processes and factors in UK Export Finance consideration of applications.

Brochures

Download product brochures

Customer service

Published 29 April 2013