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Credit insurance – an excellent way of protecting sales receivables

Liiketoimintajohtaja Jussi Haarasilta
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Credit insurance enables an enterprise to protect itself against credit losses when the client is insolvent or unwilling to pay. Using credit insurance is easy and it is suitable for continuous transactions with short terms of payment.

Due to the coronavirus crisis, the European Commission increased Member States’ possibilities to grant export credit guarantees for their companies and thus temporarily mitigate the effects of the crisis in the field of credit insurance.

This package of measures allows Finnvera to grant export credit guarantees with a short risk period also to EU countries and Western industrial countries, which is normally not possible.

Credit insurance is a fairly affordable way of ensuring that an export transaction succeeds and that the exporter receives a payment to their account. In practice, insuring a EUR 100,000 export transaction will cost a few thousand euro, including the opening fee, and Finnvera will grant a 90 per cent guarantee for the transaction.

Jussi Haarasilta, Executive Vice President of Finnvera’s Large Corporates unit is satisfied with the Commission’s decision since the temporary permission allows Finnvera to fill the service deficit that was created on the market and enable Finnish exports to the world.

"Agreements may be made until the end of 2020, and the export transactions must be completed by June 2021. Therefore, it pays to act quickly", encourages Haarasilta.

Management of buyer risk and buyer financing are central means of export financing

Credit insurance offers a company financial protection and it is an easy way of insuring sales receivables. Credit insurance affords protection against commercial and political risks in short payment term transactions.

Haarasilta notes that, first and foremost, credit insurance protects the enterprise from credit losses. The insurer delivers the money in 30 days if the client enterprise becomes insolvent or goes bankrupt. Compensation may also be sought after a 90-day payment delay, provided that the receivable is undisputed.

"There are cases in which a buyer cannot meet their payment obligations or is otherwise reluctant to pay their bills. In the worst case, the buyer might end up in bankruptcy. For some companies, even a single major credit loss might prove fatal", says Haarasilta.

A credit insurance supports a company’s risk management and helps it to grow profitably.

The credit insurance allows the seller enterprise to grant higher credit limits to its current clients or seek new major customers or entire markets, which might otherwise be too risky.

"Credit insurance supports a company’s risk management and helps it to grow profitably. The enterprise can expand into new markets faster and gains a competitive advantage by granting a payment period to its clients. Credit insurance also helps exporters maintain their trade relationships even in times of uncertainty", says Haarasilta.

Credit insurance is also suitable for small transactions

Credit insurance is suitable for companies engaging in foreign trade and is also suitable for small transactions. For example, Finnvera offers credit limits of EUR 10,000.

SMEs have not used credit insurance very much since they are either unaware of the product or might not consider it necessary. Haarasilta encourages companies of all sizes to consider their risk management and think about which transactions ought to be insured.

"The transactions in which we grant credit insurance are diverse. Most often, they are related to the export trade of Finnish pulp and paper products to developing countries. Now, we also grant credit insurance to EU countries and other industrial countries."


Export credit guarantee guarantees can be applied in Finnvera’s online service. Finnvera will review each buyer enterprise case-by-case and can only accept buyers whose financial standing is strong. Finnvera will also ask the exporter to indicate whether the buyer has had a credit limit from a private credit insurer.

Finnvera requires a Finnish content of 30 per cent for the export to be guaranteed or that the goods to be exported are manufactured by a Finnish exporter or a Finnish enterprise that belongs to the group of the exporter.

FACT: What is credit insurance?

  • Credit insurance protects sales receivables against risks, such as client’s insolvency, corporate restructuring or bankruptcy.
  • In case of a problem, compensation may be sought after a 90-day payment delay, provided that the receivable is undisputed.
  • Credit insurance is intended for continuous trade with short payment periods. It is also suitable for small transactions.
  • Finnvera’s guarantee cover in credit insurance is 90 per cent.