Credit insurance

In Norway, you can also insure your domestic and international receivables against credit losses as a seller. There are four main providers in Norway: GK (GIEK Credit Insurance), which is owned by the Ministry of Trade, Industry and Fisheries, Atradius, Euler Hermes and Tryg Forsikring. All operate on commercial terms.

Credit insurance can cover risks both before and after delivery. When you confirm an export order, you will often place orders with your subcontractors and make other financial commitments. Pre-delivery risk may be relevant if you are producing bespoke goods that may only have scrap value if the buyer becomes insolvent or no longer wants the product.

As with other types of insurance, credit insurance normally includes an excess. Exporters and credit insurers most commonly agree on 90 per cent cover and a 10 per cent excess. The extent of the credit insurer's support depends on:

Whether you have taken out a whole-turnover policy (covering all credit sales) or an individual policy (covering a single buyer). In principle, the credit insurer will generally want to insure all your receivables, or at least a selection covering both customers considered low risk and those considered higher risk.

One key benefit is that the credit insurance company can investigate your customers' financial position on your behalf. This is particularly valuable for smaller businesses with limited capacity to assess their customers' creditworthiness. However, insurers will often set credit limits and maximum payment terms for sales to individual customers. Make sure you understand these limits before making the sale.

Make sure the credit period you grant your customer is also approved by the credit insurance company.

Some countries are considered too 'high-risk' for credit insurance companies to cover. In these cases, we recommend using other types of financial risk mitigation instruments, such as letters of credit.

If you continue selling to customers who have not paid on time or within the 'grace period' agreed with the credit insurance company, you risk invalidating your credit insurance.

Export factoring provides short-term financing for a company's trade receivables. You sell your receivables to an independent factoring company (a standalone factoring company, part of a financial institution and/or part of a bank). Factoring is available in two forms:

Invoice factoring, which is purely a form of financing.
Factoring with or without recourse.

Non-recourse factoring means that the seller transfers all the risk to the finance company, removing it from its own balance sheet. The factoring company manages the ongoing financing of the receivables portfolio.

Benefits of export factoring:
• You can offer your customers credit
• You receive a 90% or 100% guarantee of payment
• You receive the invoice amount quickly
• You reduce your administrative workload
• The guarantee covers both the ability and willingness to pay (commercial risk)
• Your company does not bear the burden of proof

As with the other payment instruments, it is important to maintain a good dialogue with your factoring company about the other terms and conditions.