Key Factors for Success of Export Credit Agencies

Sweden is dependent on a successful export industry and it is therefore vital that export companies continue to develop and succeed in business. An attractive export credit system can be of crucial significance to where companies choose to base their production. A company that can help export organizations with export skydd is Coface.

The year of 2012 saw significant uncertainty surrounding economic development in companies all over the world including Sweden. This has resulted in increased austerity and restraint by companies and investors. Despite the caution in the market, Export Credit Agencies (ECAs) were extremely active during the year, assisting Swedish exporters with a financing of nearly 56.2 billion, which is the second highest volume ever (ECA, IMPORTANCE OF EXPORT CREDIT AGENCIES, 2014).

In the extremely competitive international trade environment that characterizes exporters’’ sales, export financing is important for success. While exporters want their invoice payment as quickly as possible, importers would rather delay the payment until the goods or cargo is received or resold. Hence, ECAs have become really important players in international trade and financial markets as they provide exportförsäkring which is very important for export companies.

Here are a few key factors that play a significant role for the success of Export Credit Agencies (ECAs):

Capital Adequacy: Before ECAs can provide exportkredit for exporters, it is very important that they have adequate amount of capital themselves. The most successful ECAs have substantial paid-in capital, which is invested in interest-bearing securities. These investment earnings are sufficient to keep the ECAs profitable even during the first few years of operation when the revenue is relatively low.

Diversity of Operations: The key to a successful ECA is to offer a full range of products, including loans, guarantees, insurance and technical assistance. By offering all these programs, the ECA can maximize its impact on exporters by being a one-stop shop for them. This can also help to cushion low returns in some areas with higher returns in others.

Quality of Management: A recent study shows that the most successful ECAs are run by financial professionals that have lot of experience with management of private financial institutions. They are completely familiar with the techniques of financial trade and have spectacular knowledge about economy and how they can benefit from it.

There are a number of ECAs in Sweden that can help exports run their business efficiently without any hassle. One company that provides export skydd is Coface.

The success of a business is often determined by careful management of cash. Yet, maintaining a healthy cash flow is a challenging part of any business regardless of the industry.