How it works?
Specific Transaction Policy enables Pakistani exporters to insure trade receivables arising from a single export transaction.
The main aim of STP is to protect the exporter’s export contract with single buyer made on credit terms and open account basis against losses due to the failure of buyers to pay for goods and services.
Managing the risk of credit insurance is a crucial part of doing business internationally, as it covers the companies, allows exporters to offer more competitive terms and helps them venture into new markets.
- Pakistani exporter receives export order from its foreign buyer.
- Exporter submits proposal for STP policy detailing country of export, name of buyer, list of goods to be exported, payment terms, financial statements of the buyer, etc.
- After positively assessing the creditworthiness of the buyer, EXIM Bank prepares a quotation confirming the insurance credit limits, premium percentage etc.
- Upon Exporter’s acceptance, EXIM Bank will issue STP policy along with confirmation of cover detailing the buyer’s credit limit, risk disclosures and accepted payment terms for the buyer.
Working Capital Facility for the Bank:
- The Exporter will have the option to negotiate short-term working capital line from Commercial Bank against subject export receivables and offer EXIM Bank’s credit insurance policy as a security (i.e. instead of hypothecation charge on receivables).
- Upon successful offer from the Bank, EXIM Bank will issue the ‘Letter of Endorsement’ in favour of the Bank as ‘Loss Payee”.
Pakistani exporters of all sizes.
- Helping to grow business and expand market presence by facilitating the development of business overseas.
- Protecting against non-payment by foreign buyers caused by buyer insolvency, bankruptcy, and protracted default.
- Helping an exporter arrange financing from a lender and improve liquidity by using insured receivables as additional collateral.
- Enhancing credit risk management by exploiting the insurer’s expertise related to export credit and default data on buyers.
- STP Credit Cover can be accepted as collateral for working capital financing or in accounts receivable financing. In this case the exporter will need to endorse the policy in favor of lending Bank as loss payee.
For Foreign Buyers:
- More attractive payment terms.
- Less costs (in comparison with commercial financing).
- You submit a credit proposal.
- We prepare a quotation.
- You submit individual buyers to be included in the cover.
- We run a credit check on your buyers.
- You are now covered.
- Claim Payments.