Bank of America Merrill Lynch and the Export Finance and Insurance Corporation (EFIC) have helped Australian businesses protect their export contract payments by signing a Master Documentary Credit Guarantee Facility.

 

Andrea Govaert, EFIC’s Executive Director, SME and Mid-Market, explains that to ensure they receive payments on contracts with overseas buyers, exporters undergo a process of confirming the documentary credit which results in the exporters’ bank takes the risk of the buyer’s bank paying on time.

 

“Companies exporting to developing markets may sometimes find that their banks are unable to take all of the risk on the overseas buyer’s bank for payments,” said Ms Govaert. “Even if the exporter’s bank has a relationship with the buyer’s bank, they may have limited credit capacity and have reached their limits. This leaves the exporter facing the risk of having to rely on the buyer’s bank for their payment without the support of their local Australian bank.”

 

The documentary credit guarantee provided by the EFIC will mitigate the non-payment risk of the documentary credit issuing bank. This will help support Australian exporters in managing their export payment risk and assist Australian exporters to overcome the financial barriers faced when growing their business overseas.