Why You Need Export Trade Insurance from NZ Government
New Zealand exporters seeking financial protection against the non-payment by a customer could find themselves eligible for trade insurance from the New Zealand Export Credit Office (NZECO).
The insurance —which complements that provided by private insurers and may also support additional trade finance provided by a bank — ensures protection in situations of bankruptcy or foreign currency restrictions, explains NZECO head of business origination Peter Rowe.
“Given the current global environment it is as important as ever for exporters to know their customers and to negotiate as favourable payment terms as they can,” he said. “In the event that a buyer requires to pay after delivery of the goods or services, then an exporter is recommended to consider the Impact on its cash flow, as well as ways to mitigate against the risk of non-payment.”
NZECO’s assistance proved pivotal to Napier-based New Zealand Natural Juice Company as it attempted to enter the Taiwanese market. Although the contract value was below the standard thresholds for private sector insurers, the sale was nonetheless of sufficient size that left the Kiwi firm feeling it needed protection.
Unable to obtain suitable cover in the private sector, the firm’s insurance broker recommended NZECO and the commercial unit of Treasury were ultimately able to provide the trade insurance to fulfill the export contract, said NZECO business originator Tina Leung.
“The New Zealand Natural Juice Company has a great product and this sale was a great opportunity for the company,” said Ms Leung. “By working with the exporter and the buyer we were able to provide payment protection for the exporter which gave them the confidence to proceed with the transaction.”
NZECO works closely with private banks, trade credit insurers, and other New Zealand export promotion agencies. It is understood to have a range of trade credit and trade finance solutions to help exporters secure export sales, mitigate repayment risk or access additional trade finance from their bank.
Source: NZ Shipping Gazette
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