International contracts offer growth opportunities, but they also come with higher risks: longer payment terms, unfamiliar legal systems, political uncertainty and rising insolvency figures. The number of corporate insolvencies in Germany has been rising steadily again since 2021. According to a survey by Allianz Trade, almost half of German exporters expect an increase in payment defaults in their international business. Studies also show that 82% of companies report payment delays and 8 out of 10 companies grant supplier credit - a critical mix for your liquidity.

In this guide, you will learn step by step

  • how to systematically identify risks in your export business,
  • how to assess the creditworthiness of your foreign customers,
  • when credit insurance, surety bonds or factoring are the right tool,
  • how to distinguish between EU countries and non-EU markets,
  • what a practical decision checklist looks like for typical export scenarios,
  • which mistakes you should avoid.

renz credit & consulting (rcc) supports medium-sized companies in these decisions as an independent specialist broker for credit insurance, surety bonds, factoring and financing - with comprehensive market knowledge and a strong network of credit insurers, banks, factoring companies and credit agencies. Learn more on the rcc homepage: Broker and advisor for credit insurance & financing.

Prerequisites: What you should clarify before deciding on risk protection

Before choosing instruments, you should define some basic internal parameters:

  • Export structure
    • Share of foreign sales (EU vs. non-EU countries)
    • Average order size
    • Typical payment terms (30, 60, 90 days or longer)
  • Payment terms and collateral
    • Open account, advance payment, letter of credit, documentary collection
    • Existing credit insurance, surety bonds, guarantees
  • Accounts receivable and finance processes
    • Dunning, collections, responsibilities
    • IT/ERP systems, reporting
  • Creditworthiness information
    • Your own payment experience
    • Commercial credit reports and internal ratings
  • Financial objectives
    • Primary objective: Minimize default risk, strengthen liquidity, preserve bank lines - or a combination of these?

The clearer these points are, the more precisely you can structure your export risk protection - and the better rcc can develop a tailored solution.

Step 1: Systematically identify risks in your export business

1.1 Typical risks in export business

Export transactions add further risk layers on top of the classic debtor risks:

  • Economic risks
    • Customer insolvency
    • Payment delays, disputed receivables
  • Political risks
    • Transfer restrictions, foreign exchange shortages
    • War, embargoes, government intervention
  • Country and currency risks
    • Exchange rate fluctuations, capital controls, corruption
  • Project and manufacturing risks
    • Capital goods transactions with long tenors
    • Project cancellation during production or installation

Tip: Create a risk matrix with the axes "country risk" (low/medium/high) and "customer risk" (creditworthiness), combined with "order size". This matrix will help you later when choosing the right instrument.

1.2 Why unprotected international business is risky

If you sell exports on open account, you are effectively acting as a lender. Credit insurers view supplier credit as a genuine form of lending - which makes professional risk management with credit checks and continuous monitoring essential.

Without structured protection, you face the risk of:

  • unexpected large losses on individual projects,
  • creeping liquidity bottlenecks due to late payments,
  • deteriorating bank ratings as receivables increase,
  • restricted growth opportunities because risks are too high.

Step 2: Professionally assess the creditworthiness of your foreign customers

2.1 Data sources for credit assessment

A sound credit assessment is the basis of any export risk protection. Key sources include:

  • Commercial credit reports (domestic and international)
  • Bank references from your house bank
  • Payment history from your ERP system
  • Public sources (annual financial statements, registers)

Credit insurers use commercial credit reports, bank references, published financial statements and reported payment delays to assess creditworthiness. rcc also uses these sources and offers additional business information and credit monitoring as a service.

Tip: For your top export customers, keep an internal "credit file" with key figures (revenue, limit, payment terms, payment behavior, credit rating) to maintain a clear overview.

2.2 Common mistake: Relying on gut feeling instead of data

Warning - common mistake:

Many exporters rely on personal relationships with existing customers ("They will pay") even when the economic situation in the destination country is deteriorating.

Always combine your personal assessment with up-to-date credit data and external country risk assessments.

Step 3: EU country or non-EU market? Classifying risks correctly

Not all international markets are the same. It makes a difference whether you are exporting to an EU country or a non-EU market:

EU countries (and selected OECD countries):

  • Focus on economic risks (insolvency, payment delays)
  • Developed insolvency laws and enforceability
  • Risks are marketable, i.e. private credit insurers can cover them; short-term risks with tenors of up to two years are reserved for the private insurance market within the EU.

Many non-EU countries:

  • Additional political risks (transfer bans, expropriation, war)
  • Possible foreign exchange shortages, weak rule of law

For non-marketable risks, government export credit guarantees (Hermes cover) offer protection against economic and political risks in selected countries.

Practical takeaway:

  • Serial exports to EU countries: usually private credit insurance plus factoring if needed.
  • Capital goods projects in politically riskier non-EU countries: a combination of capital goods credit insurance (private or public) and surety bonds.

Step 4: Choosing the right instrument - credit insurance, surety bonds or factoring?

4.1 Spotlight on credit insurance / export credit insurance

Credit insurance (trade or export credit insurance) protects you against payment defaults by your customers. Depending on the product, it can also cover political risks and capital goods transactions with longer tenors.

In the event of a claim, credit insurers typically indemnify up to 90% of the insured receivable and help you actively manage risks through credit checks and limit management.

When does credit insurance make sense?

  • You have many domestic and foreign debtors with open account terms.
  • Individual bad debts could significantly impact your liquidity.
  • You want to professionalize your credit checks.
  • You want to strengthen your bank lines (improve your rating profile).

You can find more information here: "You sell goods on account - rcc protects you".

Typical example:

You regularly supply more than 100 customers in EU and non-EU countries with payment terms of 60-90 days. Credit insurance bundles these standard risks and includes credit checks and limit allocation.

4.2 Surety bonds and guarantees - when customers demand collateral

In international project business, construction or mechanical engineering, customers often demand surety bonds (guarantees), such as:

  • Advance payment bond (securing advance payments)
  • Performance bond (ensuring delivery and performance obligations)
  • Warranty bond (covering warranty and rectification risks)

A surety insurance policy relieves pressure on your bank lines because bonds do not have to be issued through your house bank. Premiums are typically between 0.5-4% per year of the bond amount, depending on credit quality, industry and tenor.

Professional surety bond management makes sense when ...

  • customers regularly require guarantees,
  • you want to preserve your bank lines,
  • parallel bonds are needed for projects or service contracts,
  • varying guarantee standards are common in international business.

rcc optimizes your surety bond management, structures your bond portfolio and coordinates banks and insurers. Further information: "Surety bond, guarantee? We optimize your surety bond management."

4.3 Factoring (including export factoring) - when liquidity and risk transfer matter

With factoring, you sell your receivables to a factor and receive most of the amount immediately. With true factoring, the factor assumes the full credit risk. The factor can also handle accounting, receivables management and dunning.

Factoring fees are usually between 0.5-2.5% of the invoice amount plus pre-financing interest of around 4-8% p.a.

Export factoring is worthwhile when ...

  • you have to grant long payment terms (90-180 days),
  • your export business is growing strongly and your credit lines are reaching their limits,
  • you want to relieve pressure on receivables management, especially abroad,
  • you want to combine liquidity with risk transfer.

Factoring generally pays off from an annual turnover of around €250,000-500,000, especially for companies that regularly do B2B business and invoice on account.

rcc structures different factoring models and also checks how existing credit insurance policies can be integrated. Overview: "Factoring, purchase financing, project financing".

Tip: The combination of credit insurance (for broad protection) and export factoring (for liquidity and relief in receivables management) is often particularly efficient.

Step 5: Decision checklist - which instrument for which export scenario?

Use this checklist as a guide. In most cases, a combination of instruments is recommended.

Scenario A: Diversified export business within the EU

  • Many customers in several EU countries
  • Payment terms of 60-90 days, medium-sized orders
  • Objective: Avoid bad debts, improve credit assessment

Recommendation:

  • Foundation: Trade/credit insurance with individual credit limits
  • Optional: Integration into export factoring for additional liquidity

Scenario B: Large-scale project in a non-EU country

  • Single project (e.g. machine, plant) worth several million euros
  • Long production and delivery times, advance payments, warranty periods
  • Country with elevated political risk

Recommendation:

  • Capital goods credit insurance / export credit guarantee (Hermes cover, etc.)
  • Advance payment, performance and warranty bonds via bank or surety insurer
  • If necessary, manufacturing risk cover

Scenario C: Rapidly growing serial business with long payment terms

  • Recurring deliveries worldwide, payment terms of up to 120 days
  • High working capital requirements, bank lines fully utilized

Recommendation:

  • Export factoring (full service) with assumption of credit risk
  • Can be combined with credit insurance
  • In addition, targeted use of surety bonds for project-specific collateral

Warning - common mistake:

A single standalone solution is often not enough. A mix of instruments aligned with markets, customers and volumes is usually more effective.

Step 6: Putting it into practice - how to proceed

6.1 Current-state analysis and setting objectives

  1. Analyze your receivables structure (by country, industry, customer, payment terms, default history)
  2. Prioritize objectives: Liquidity, protection against bad debts, relieving the burden on accounting?
  3. Review debt service capacity and bank lines - where is there room to maneuver and where is relief (e.g. via surety insurance) worthwhile?

6.2 Market comparison and structuring

  1. Create a briefing (exports, revenue, receivables volume, top debtors, payment terms, desired instruments)
  2. Appoint an independent broker: rcc compares offers from relevant providers and designs an individual structure.
  3. Negotiate terms: Deductibles, limits, exclusions, deadlines, fees, guarantee facilities.

6.3 Contract design and interfaces

  1. Review contract clauses:
    • Credit insurance: scope of cover, deductible, limit mechanics, payment terms, obligations.
    • Factoring: true vs. non-recourse factoring, assumption of credit risk, notice of assignment, reporting.
    • Surety insurance / guarantees: bond types, facility limits, costs, issuance processes.
  2. Define interfaces:
    • Who applies for limits and guarantees?
    • How are receivables transferred?
    • Who monitors obligations and deadlines?

6.4 Implementing in your processes

  1. Create a process map and anchor the instruments where they have an impact:
    • Credit insurance: at new customer setup, quotation and delivery release.
    • Factoring: invoicing and transfer to the factor.
    • Surety bonds: to be considered already at the quotation and contract stage.
  2. Train employees (sales, accounting, controlling, export) so that the rules on limits, payment terms and collateral are followed.

6.5 Ongoing management and review

  1. Monitoring:
    • Utilization of credit limits and guarantee facilities
    • Trends in payment terms and overdue receivables
    • Use and costs of factoring
  2. Annual review with broker and providers; adjust to markets, revenue and risk changes.

Typical pitfalls - and how to avoid them

1. Securing risks too late
Putting protection in place only after a loss event is dangerous.

  • Better: Establish structures early and take warning signs seriously.

2. Comparing only on price
Focusing solely on premiums ignores many quality factors.

  • Look at scope of cover, deductible, service, flexibility, claims handling and receivables management support.

3. Underestimating contractual obligations
Contracts contain important duties.

  • Clear internal responsibilities and checklists provide security.

4. No coordination with banks
Risk protection, financing and rating are closely linked.

  • Through professional financial communication and coordinated structures, you can improve your corporate rating and secure better conditions.

Next steps: How to get started now

  1. Analyze your receivables and export structure
  2. Define priorities: Liquidity, risk mitigation, relief for finance/receivables management
  3. Seek independent advice: A specialist broker like rcc has a broad market overview, knows current terms and also supports you in the event of a loss.
  4. Start with a pilot project: Insure or factor a core segment and gather experience.

If you want to secure your export projects in a structured way, arrange a non-binding consultation: Contact renz credit & consulting GmbH.

FAQ on securing export projects

1. Do I need credit insurance for every international transaction?

Not necessarily. What matters is the size and risk profile of your receivables portfolio. Credit insurance is relevant when:

  • individual losses could seriously endanger your liquidity,
  • you have many debtors in different countries,
  • you rely on open account terms.

Small, manageable exposures - for example, advance payment or very short payment terms - can also be handled responsibly without credit insurance. An independent broker can help you define sensible thresholds.

2. How do credit insurance and Hermes cover differ?

  • Credit insurance (private):
    • Primarily covers economic risks (insolvency, payment delay), sometimes political risks as well.
    • Focus on marketable risks in EU, OECD and other markets.
  • Hermes cover (public export credit guarantee):
    • Supplements private solutions where private providers do not or only partially cover risks (non-marketable risks, longer tenors, politically risky countries).

In practice, both instruments are often used in combination.

3. How much does export factoring cost?

Costs vary depending on volume, structure and credit quality:

  • Factoring fee: approx. 0.5-2.5% of the invoice amount
  • Pre-financing interest usually 4-8% p.a.

The key is the net effect: the liquidity gained and the bad debts avoided compared with the costs.

4. From what company size does export risk protection pay off?

The decisive factor is your receivables structure. As a guideline:

  • Factoring and structured credit insurance generally pay off from an annual turnover of around €250,000-500,000, particularly in B2B business.

The higher your export share and the longer your payment terms, the more you benefit.

5. Can I use surety bonds to relieve pressure on my bank lines?

Yes. If you issue guarantees via surety insurance instead of through your house bank, your overdraft facility remains available. This means your bank lines are free for other types of financing while you still provide the required collateral.

rcc supports you in building professional surety bond management and in optimally combining bank and insurance solutions.