Helping you compete for and win export contracts
When competing to win export contracts, finance can be as important as the quality of your product or service.
EFIC helps Australian exporters large and small get the finance they need in order to win international business. At EFIC, we understand the issues exporters face in competing for overseas contracts:
- When buyer finance is key to winning a deal, we can support your bid with a competitive finance package
- If a performance or warranty bond is a condition of a contract or tender, EFIC may be able to help when your bank can’t
- If you need funds from your buyer in order to start work on their contract, an advance payment bond from EFIC can give your buyer the confidence to make an upfront payment
- When doing business in the US, we can arrange the local surety bonds you’ll require to compete for contracts in that market.
If you’re in competition for international contracts, a finance package which enables a potential overseas buyer to purchase your goods and services can be a critical factor in your success. A Direct Loan or Export Finance Guarantee from EFIC can give you an edge when you are submitting a tender or competing for a contract, complementing your technical capability with a comprehensive buyer finance package. And if your buyer requires finance before they can consider you as a supplier, our solutions mean you won’t lose business to competitors who can offer buyer finance.
Under a direct loan facility, EFIC enters into a loan agreement with your overseas buyer. At the buyer’s direction, we advance the loan funds to you as export contract payments. Your buyer makes loan repayments to us in accordance with the loan agreement.
An export finance guarantee is a facility between EFIC, a bank or other financial institution and your overseas buyer. The bank enters into a loan agreement with the buyer, with EFIC providing a guarantee to the bank of the buyer’s payment obligations. At the buyer’s direction, the bank advances the loan funds to you as export contract payments. Your buyer repays the bank in accordance with the loan agreement.
Advance payment, performance and warranty bonds
In international trade, it’s common for an overseas buyer to require their supplier to provide one or more bonds (also known as guarantees). As a result, the ability to provide them to a potential buyer means you can compete more effectively for contracts in the global marketplace.
If your bank can’t help you with a bond, or they require an amount of security that you can’t provide, EFIC may be able to assist. A bond from EFIC can help you meet your export contract or tender requirements, without tying up your working capital.
Bonds often requested by overseas buyers include:
At the start of an export contract, your overseas buyer may agree to make an upfront payment to you in advance of receiving delivery of your goods or services. While this provides you with cash to keep working on the export contract, your buyer may need assurance that their upfront payment will be returned if you don’t complete the contract. An advance payment bond gives your buyer security for their advance payment.
A performance bond gives your buyer assurance that if you don’t perform your obligations under the export contract, they can call on the bond to reduce their losses.
A warranty bond protects your buyer from loss if the goods or services you’ve provided don’t meet your contractual warranty obligations after you’ve completed the contract.
For Australian exporters, competing for business in the United States market can present particular challenges. In the US market, suppliers are typically required to provide a surety bond, from a registered US surety bond issuer, for up to 100% of the export contract value as security for your performance obligations.
A US Bonding Line from EFIC offers easy access to surety bonds. We work with Liberty Mutual Insurance Company to help you meet your US bonding requirement so that without using up your working capital, you can compete more effectively in the US market.
How can EFIC help you?
EFIC helps Australian exporters overcome financial barriers to export success. If you’re seeking financial solutions to help you win contracts in the global marketplace, contact us on 1800 887 588 or fill out our online form.
EFIC’s compliance with legislation and OECD guidelines together with its credit assessment and other policies influence the actual solutions (which may be different from or in addition to the above) for any particular transaction.
To the maximum extent permitted by law, EFIC will not be liable for any direct or indirect loss or damage incurred by any person on the basis of information in this general summary.
© Export Finance and Insurance Corporation 2009