Accounts receivable insurance (EDC)
Accounts receivable insurance, which Export Development Canada (EDC) sells as credit insurance, protects an exporter’s international receivables, the money its customers owe, if a customer does not pay. EDC also says lenders often view insured receivables as lower risk and that a bank could lend against insured invoices.
A buyer of an exporting business may find a policy covering the foreign customers’ invoices. EDC’s own pages use the name credit insurance for this product, and this entry uses the term for the cover on receivables. EDC says the insurance protects the business if an international customer does not pay what it owes.
How EDC describes it
EDC says that if a buyer does not pay, the insurance can help limit the financial impact. It also says a bank could lend against insured invoices. EDC states the share of insured losses it reimburses and the lending ratio on its own pages, and those figures change, so read them there.
What to ask
- Is a policy in force, who is the insured, and does it name a lender?
- Which customers and countries does it cover?
- Can the policy continue after a sale, or must the buyer arrange new cover with EDC?
- Does any loan depend on the policy being in force?
See stacking CSBFP, BDC and credit union loans and the entry on accounts receivable.
Sources
This definition is checked against primary sources. Links were last confirmed on the dates shown.
- 01Export Development CanadaGovernmentCredit insurance for exporters: A beginner’s guide
- 02Export Development CanadaGovernment7 surprising non-payment risks and how to avoid them
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