Protect Your Export Business with ECGC: What Happens When an Overseas Buyer Defaults on Payment
Updated: May 1
As an exporter, one of the biggest challenges is to ensure that you receive payment from overseas buyers. In order to overcome this challenge, you need to have a reliable partner who can provide insurance coverage and ensure that you get paid for your exports. This is where Export Credit Guarantee Corporation (ECGC) comes in. Let's take a look at how ECGC ensures payment security for exporters.
ECGC is a central government undertaking body that provides credit guarantee on the default of payments by overseas buyers.
Once you finalize an order with an overseas buyer, you can approach ECGC to get approval on the buyer and the amount of credit limit.
ECGC collects creditworthiness data on the buyer and determines the maximum limit of amount that can be shipped at any point in time.
You can apply for insurance coverage on a shipment-wise order or at a lump sum as a comprehensive policy.
If the buyer defaults on payment, ECGC reimburses the defaulted payment, provided you have an insurance policy and paid the necessary premium.
ECGC also investigates the actual cause of default and if the investigation report is not satisfactory, the firm will be blacklisted.
If a buyer/importer has been blacklisted by ECGC, they can't buy/import goods on a credit basis from any other suppliers/sellers/exporters.
ECGC circulates information about the default of payment with all their international contacts and takes up the matter legally with higher legal levels.
Overseas buyers who are blacklisted by ECGC will also be blacklisted by other international credit agencies and counterparts.
Once an overseas buyer has been blacklisted, they can't buy goods from anywhere in the country, as ECGC does not approve their creditworthiness to exporters and bankers.
In conclusion, ECGC plays a crucial role in ensuring payment security for exporters. By providing insurance coverage and taking legal action against defaulters, ECGC helps exporters minimize their credit risks and focus on their core business. So, as an exporter, you should definitely consider partnering with ECGC for a safer and more secure export business.
Summary:
Exporters face the challenge of receiving payment from overseas buyers, making it essential to have a reliable partner that provides insurance coverage and guarantees payment. The Export Credit Guarantee Corporation (ECGC) is a central government undertaking that provides credit guarantees on the default of payments by overseas buyers. Once you finalize an order with an overseas buyer, you can approach ECGC to get approval on the buyer and the credit limit. ECGC reimburses the defaulted payment, provided you have an insurance policy and paid the necessary premium. ECGC also investigates the actual cause of default and blacklists firms that do not meet satisfactory standards. ECGC's services reduce exporters' credit risks, so partnering with ECGC is crucial to ensuring payment security for exporters.