• Impello Global

The Risk of Foreign Receivables and How Insurance Can Help



Foreign receivables are the accounts receivable due and payable from a buyer located outside of the seller’s country. In terms of business growth, being able to expand outside of your business’s country of origin is ideal, but foreign partnerships and business endeavors come with their own set of risks. Risks such as enforceability, collectability, political risk, currency risk, and credit risk, are just some of the risks associated with selling internationally.



In addition to the increased risks with selling internationally, foreign sales tend to have a longer cash conversion cycle. Because these sales tend to take longer to convert to cash, companies are often faced with the need to finance their working capital requirements which often leads to an unwelcome realization… banks do not like foreign receivables as collateral.



Trade credit insurance is often a solution to this issue. By insuring foreign accounts receivable, companies can reduce their risks associated with selling internationally, and provide those benefits to their bank to entice them to lend against this segment of collateral. Terms and pricing will vary but generally speaking, advance rates are comparable to uninsured domestic accounts receivable (often higher) and eligibility, also comparable to domestic accounts receivable, is often limited to 90 days from invoice date unless exceptions are approved by the lender.



Trade credit insurance is still a relatively unknown type of insurance in the US but its popularity is growing. As business continue to look for growth outside of their home region, they are finding that trade credit insurance is an effective tool to help mitigate increased risks and improve access to working capital financing.



Are you ready to grow and protect your business? Impello Global is a trade finance advisory boutique and trade credit and political risk insurance brokerage, headquartered in Seattle, Washington. We specialize in trade credit and political risk insurance and provide advisory services to companies and lenders who are looking to expand their trade finance capabilities.




If you are a company or a lender trying to better understand trade credit insurance or looking for guidance as to how trade credit insurance can help improve working capital financing, our team would be delighted to learn more about your business and discuss options available to you. Please visit our website at www.impelloglobal.com or contact us directly at info@impelloglobal.com.

    Want to learn more? Contact us

    Phone: 206.414.8460

    Email: info@impelloglobal.com

    Impello Global

    Phone: 206.414.8460
    Email: info@impelloglobal.com

    © 2020 by Impello Global