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Article | 4-minute read

Using the Export Finance Insurance Corporation (EFIC)

Business development

As an exporter operating in the current market, you may be concerned about currency fluctuations or events that can cause your buyers to delay payments, or worse, not pay at all. Find out how the Australian Government’s Export Finance Insurance Corporation (EFIC) services may help your business lower its exporting risk.

What is the EFIC

The Export Finance and Insurance Corporation serves as Australia’s export credit agency. EFIC partners with banks to find financial solutions for small and medium sized exporters – helping them to expand overseas.

 

What the agency does

Small exporters often struggle to meet the financial requirements imposed on them by overseas buyers. In partnership with banks, EFIC typically works to facilitate:

  • Working capital guarantees – EFIC’s working capital guarantee provides security to your bank, allowing you to unlock working capital and move forward with a contract.
  • Bonds – overseas buyers usually require suppliers to provide bonds (or guarantees) to secure an export contract and free up working capital. If your bank can’t help, or requires security that you can’t provide, EFIC may be able to help with advance payment bonds, performance bonds, warranty bonds, or US surety bonds.
  • Documentary credit guarantees – documentary credit guarantees allow your business to receive export contract payments due to you by shifting the payment risk of your contract from your overseas buyer to your bank. However, banks might be unwilling to take on this risk. EFIC’s documentary credit guarantee assumes the credit risk, allowing your bank to issue payment to you with confidence.
  • Foreign currency facility guarantees – exchange rate fluctuations can adversely impact profits. EFIC’s foreign currency facility guarantees lock in exchange rates, allowing you to reduce exposure to exchange rate fluctuations. In addition to protecting your export business’s profits, increased trading limits may be available from participating foreign exchange specialists.
  • Medium-term export payments insurance – commercial and political events can translate into non-payment by overseas buyers. EFIC’s medium-term exports payments insurance protects against non-payment due to defined political and commercial risks, such as wars and riots, or an overseas buyer’s insolvency.

 

How your business can benefit by using the EFIC

Why use EFIC when you could work directly with your banker to obtain working capital financing, bonds and other financial services for your export business?

EFIC can step in when there are concerns about the contract’s terms or risks. Likewise, if your business doesn’t have enough assets to secure financing, your business may not qualify for a loan without a guarantee.

EFIC typically works in partnership with your bank, offering guarantees and reducing the risks associated with helping smaller exporters. In other words, EFIC helps your bank to help your business.

 

Work with the credit agency

By working with EFIC, your business may be able to:

  • gain greater access to working capital
  • win more overseas contracts
  • receive export contract payments owed
  • protect profits from adverse currency fluctuations
  • manage the risk of non-payments due to the buyer’s insolvency or other external events

 

EFIC tools and resources

EFIC has a mission of supporting Australian exporters, helping them to ‘win business, grow internationally, and achieve export success.’

While providing financial solutions in partnership with banks is a large part of EFIC’s role, the agency also offers useful tools and resources for exporters.

 

Next steps

 

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