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UNLOCKING THE VALUE OF TRADE CREDIT INSURANCE IN GETTING YOUR PRODUCTS AND SERVICES TO THE MARKET

Discover the value of Trade Credit Insurance (TCI) in ensuring payment for your products and services. Get an overview of TCI, its coverage, eligible transactions, features, and access to working capital financing. Safeguard your company from credit risk and insolvency.

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UNLOCKING THE VALUE OF TRADE CREDIT INSURANCE IN GETTING YOUR PRODUCTS AND SERVICES TO THE MARKET

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  1. UNLOCKING THE VALUE OF TRADE CREDIT INSURANCE IN GETTING YOUR PRODUCTS AND SERVICES TO THE MARKET

  2. TCI OVERVIEW • WHAT IS Trade Credit Insurance (TCI)? Trade Credit Insurance facilitates trade; allowing suppliers to sell goods and services without having to worry about not being paid by their customers

  3. TCI OVERVIEW • TCI offered by EXIM Bank covers both foreign and domestic receivables against commercial and political risks of non-payment by buyers • Coverage of commercial risk is automatic, however coverage of political risk attracts an additional premium

  4. TCI OVERVIEW • Commercial Risk: Risk of non-payment as a result of bankruptcy/insolvency of buyer, the buyer’s repudiation of the debt or the buyer’s protracted default • Political Risk: Risk of non-payment for political reasons, e.g. war/civil disturbance, exchange transfer, cancellation of import/export licence

  5. TCI OVERVIEW • Eligible Transactions The product is available only to companies registered in Jamaica and covers: • Export sales of goods and/or services • Domestic sales of goods only • 3rd country sale of goods originating outside of Jamaica, on behalf  of Jamaican companies

  6. TCI OVERVIEW • Eligible Transactions (cont’d) • Sale of goods supplied by subsidiaries of Jamaican companies  located and operating within CARICOM • Sale of goods transhipped from Jamaica’s duty-free zones to countries within the Caribbean region

  7. FEATURES OF TCI • Risk Coverage Commercial Cover • EXIM Bank covers 85% and the Insured bears the remaining 15% Political Cover • EXIM Bank covers 90% and the Insured  bears the remaining 10%

  8. FEATURES OF TCI • Premium Rate Policyholders are assigned a single composite rate covering commercial risk for both the export and domestic markets • Basic premium rates range between J$0.54 - J$0.60 per J$100.00 of gross invoice value of each shipment.  • Political cover attracts an additional rate that may range between J$0.03 – J$1.45 per J$100.00

  9. FEATURES OF TCI • Credit Limits Under the terms of the TCI Policy coverage is available under the following Limits • Discretionary Limit - US$3,000.00 for unsecured transactions - US$5,000.00 for secured transactions

  10. FEATURES OF TCI Special Buyer Credit Limit (SBCL) For all transactions exceeding the Discretionary Limit, the policyholder is required to apply for a SBCL which is determined based on an assessment of the buyer’s financial status and creditworthiness

  11. Why TCI? In answering this question here are some questions to consider: • Have you ever experienced credit losses, especially with buyers overseas? • Do you regularly sell to new customers and markets? • Are you concerned about the credit or country risk associated with growing your customer base overseas?

  12. Why TCI? Receivables are often the largest uninsured asset on a company’s balance sheet even though it may also be the primary source of revenue. In the same way that a company considers it prudent to insure its fixed assets, it is also in its best interest to insure its receivables, the base of its existence

  13. Access to Working Capital Financing Insurance Policy Discounting Facility (IPDF) A major benefit of TCI is the potential access to post-shipment working capital financing,as the policy can be used as collateral for the Bank’s Insurance Policy Discounting Facility (IPDF)

  14. Access to Working Capital Financing Insurance Policy Discounting Facility (IPDF) Under the IPDF the policyholder may discount up to 80% of its receivables, under an approved revolving credit limit • This credit limit is based on an assessment of the policyholder’s financial status, as well as the approved Special Buyer Credit Limits • Loans are extended for a maximum period of 120 days

  15. Key Values of TCI Having a TCI policy allows you to sell with confidence, safeguarding your company against the risks of domestic or overseas customer insolvency and non-payment • Marketing Tool - Facilitates expansion into new untapped markets - Allows flexible credit terms & competitive pricing - Allows better credit control against catastrophic bad debt losses

  16. Key Values of TCI • Financing Tool - Access to bridge financing while you await payment of outstanding receivables - Improved cash flows • Risk Management Tool - Protects your company from bad debt and insolvency

  17. Thank You

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