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Forms of Short-term Financing/Other Guarantees Linked with an Export Product

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Unit 7.1-Forms of Short-term Financing 

Introduction | Preparing to Borrow | Vendor Financing | Documentary Collections | Bank Check | Personal Resources | Bank Financing | Export Credit Insurance | Guarantees | Ex-Im Bank Financing | SBA | Equity Investment | Earnings Requirments | Working Capital | Collateral | Resource Management | Primary Differences | Factoring | Forfaiting | Summary | Resources | Activities | Assessment

Other Guarantees Linked with an Exported Product

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The export insurer provides other types of insurance:

  • A global insurance for corporations having subsidiaries abroad. For companies trading internationally, there is a growing trend for overseas sales to be made not from the head office but through a local subsidiary. The export credit insurer may offer a comprehensive and flexible credit risk management service by providing, through their international network, a cover concerning the local sales of the subsidiaries as well as the head office exports sales.
  • Manufacturing risk guarantee or work in progress. The insurer can provide a guarantee concerning the goods when they are at the stage of being manufactured. This guarantee protects the exporter against the risk of bankruptcy of the importer or against political/economic risk during the time of manufacturing (before completion and the sale).
  • Bid bonds or performance bonds or advance payments, or retention bonds or guarantees. These guarantee to protect the exporter against any unfair first demand call on those bonds.
  • Goods exposed in foreign political upheaval are guaranteed against the political or catastrophic risk for a maximum of six months.
  • Goods in a consignment stock could be insured for a period of 12 months.
  • Export insurance could be extended as well to the exporter abroad on his behalf. The guarantee is applicable on the final buyer risk.
  • Protection of the investment abroad. A corporation can insure its new production unit in a foreign country against the political cause of loss: expropriation, war, non-transfer.
  • Other coverage, such as, supplier default, breach of contracts, trade fair insurance, etc.
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