Companies insure themselves against financial losses with insurance if customers do not pay for deliveries received. In the Corona crisis, the economy is demanding that state protection be expanded.
There is growing concern in German companies that they will remain on unpaid bills for future exports. “More and more companies are reporting to us that credit insurers are withdrawing from the coverage of international trade in the corona crisis,” said Volker Treier, head of foreign trade at the German Chamber of Commerce and Industry (DIHK), the German Press Agency.
It is about securing future deliveries to customers. “If credit insurers no longer safeguard the movement of goods, the supply chains can break and there will be production losses,” warned Treier. As a result, the liquidity of the companies concerned could deteriorate. “This is also at the expense of the creditworthiness of companies. In particular, our export-oriented companies could not only slip into a liquidity crisis, but also into a solvency crisis.”
With creditworthiness falling, it is more difficult for companies to obtain credit, which can set off a downward spiral.
State export credit guarantees
Commercial credit insurers replace failures when customers cannot or do not want to pay for the delivered products. The insurers individually assess the creditworthiness of customers at home and abroad.
Depending on the valuation, deliveries can be insured up to a certain credit limit. If the check indicates impending payment problems, the limit can be reduced or lifted. Companies that had problems before the crisis were likely to come under additional pressure due to the spread of the virus and measures to combat it.
With government export credit guarantees, known as Hermes guarantees, the federal government can also protect exporters' business against an economically and politically related bad debt loss. The federal government thus largely assumes the risk of default.
Treier called for a temporary state coverage of the claims of affected export-oriented companies and “an expansion of state credit insurance to previously marketable countries, especially those of the European Union and the OECD, in the international movement of goods”.