Supplier credit
Credit granted directly by the exporter to the foreign buyer in the form of deferred payment terms, usually backed by credit insurance.
Supplier credit is a financing mechanism where the exporter directly grants the foreign buyer deferred payment terms (typically 2 to 5 years). The exporter bears the risk and finances the credit themselves.
To protect themselves, the exporter combines several instruments:
- Export credit insurance (ECA-backed) covering non-payment risk
- Receivables mobilisation: refinancing with their bank by discounting accepted drafts
- Bank guarantee from the buyer or bank aval on drafts
Supplier credit is particularly suited to exports of capital goods and services (average EUR 1 to 10 million). It provides a significant commercial advantage but ties up the exporter's cash flow.
The regulatory framework is set by the OECD Arrangement on Export Credits (Consensus) which establishes minimum conditions: minimum interest rate (CIRR), maximum duration by country, and maximum local content share.