Trade Finance Options
using Credit Insurance
Optimize your Working Capital:
Trade Receivables Securitization
Assignment for Credit Enhancement
Supply Chain Financing
Trade Credit Insurance is a very important tool to optimize, supplement and boost your trade and working capital finances. With Trade Credit Insurance risk-wrap on debtors/receivables offered by S&P AA and A+ rated financially strong international insurers, the banks and financial institutions are more comfortable in financing the trade-receivables and at competitive rates. Following are the beneficial trade finance options facilitated by Trade Credit Insurance solutions :
Factoring involves non-recourse financing of your trade receivables by banks and financial institutions. The perfected trade receivables insured by Trade Credit Insurance Policy are assigned by you to the bank which discounts and advances funds to you. Financing advance rates generally reflect the insured percentage of trade receivables under the insurance policy (upto 90%).
Just like Factoring, Invoice Discounting involves financing the insured trade receivables but on a conditional recourse basis. Financing advance rates generally reflect the insured percentage of trade receivables under the insurance policy (upto 90%).
Trade Receivables Securitization:
This involves an "Off-Balance-Sheet" trade receivables financing involving a "True Sale of Insured Receivables" to a Special Purpose Vehicle (SPV) which buys such receivables from originating Corporate and is in turn financed by banks and financial institutions. The pool of such distinct qualified asset class of receivables being wrapped by S&P A+ rated insurance security enjoys an equivalent credit rating status enabling a more competitive and strategic medium-term financing structure benefitting both the originating Corporate as well as the participating financing bank(s).
Assignment of TCI Policy for Credit Enhancement & Risk Collateral:
Trade Credit Insurance Policy can also be beneficially assigned & used by Corporates to enhance its credit & risk collateral for trade and project finance. Banks treat a strong rated Credit Insurance Policy as a 'Credit Enhancement' or even at times a 'Credit Replacement' tool supporting its financing structure.
Supply Chain Financing / Vendor Financing / Reverse Factoring:
Trade Credit Insurance Policy can be used to support your Payables Financing / Purchase Financing / Vendor Financing / Supply Chain Financing facility with the bank. The Credit Insurance policy covers your Corporate Trade Loan Repayment Obligation Default risk to the trade finance bank which then using a strong credit rated collateral of A+ & above rated insurance security provides loan facility to support financing your trade payables to insurance approved Vendors.