Who are the potential users of the export credit insurance service?

AOFI can sign an insurance contract (insurance policy) with the companies registered in the territory of the Republic of Serbia which are involved in export activities.

What risks are covered by the insurance policy?

For the time being, the insurance policy covers only commercial risks. Commercial risks are insolvency risk (bankruptcy or similar events) involving foreign debtor and risk of prolonged non-payment by a foreign buyer.

What costs are to be expected by the exporter in case of insurance?

Costs of insurance policy issue are as follows:

• Costs of obtaining financial standing report from authorized agencies
• Financial standing report can be obtained by the insurance applicant itself or AOFI can obtain it on its behalf. The price of obtaining creditworthiness varies depending on the country of the buyer for whom the information is requested and how fast the report should be delivered.
• Single fee for application processing Application processing fee is 2,000 dinars.

What does the amount of insurance premium depend on?

Insurance premium amount depends on the following factors:

• Risk of the country to which the export is made (according to OECD classification);
• Volume of export to be insured;
• Foreign buyer’s payment terms;
• Buyer’s financial standing;
• Past experience of the exporter in respect to the collection of foreign receivables

What security instruments are required for the loans granted by AOFI?

Security instruments may vary and they predominantly depend on the evaluation of the financial standing (creditworthiness) of the client. In practice a wide range of instruments for ensuring regular loan repayment is used, starting from company notes for the clients with highest creditworthiness, through jointly and severally liable debtor (guarantor), lien over equipment or goods,  real estate first mortgage, all the way to guarantee or bond aval by a commercial bank for clients whose creditworthiness evaluation received lower grade.

On what basis is the financial standing (creditworthiness) of a Client evaluated and who makes such evaluation?

The Export Credit and Insurance Agency has developed its own set of instruments for the evaluation of the loan applicant’s creditworthiness which was developed according to the standard of methods applied in the European banking operations for the purpose of protection against risks and which are recognized by the national and regulatory authorities as proper base for placement risk assessment.

Taking into the account the specificities of the business operations of domestic companies an optimal set of quantitative / financial and qualitative / non-financial business indicators was selected.

Quantitative / financial business indicators are relevant for the establishment of the financial company rating and they are influenced mostly  by the following:

• Ability of the company to repay all of its liabilities from the free cash flow as soon as possible;
• Capacity of the company to profitably employ all of its available resources;
• Ability of the company to regularly settle its due liabilities from the generated business results;
• Structure of the company financing sources (ratio of own and borrowed capital);
• Company solvency i.e. capacity of the company to regularly settle its short term liabilities from the liquid assets (cash and receivables).

Qualitative / non-financial business indicators are those that cannot be quantified and they are obtained through the data in the application form filled out by the company, interview with the client and visit to the company made by the Agency’s representative. This primarily refers to ownership structure, management quality and market position of the company (buyers, suppliers and competition analysis).

Which companies can have the status of a Predominant Exporter?

The companies which predominantly trade abroad have a Predominant Exporter status. This means that they realize over 70% of its sales in the foreign market or that in the course of the foregoing year their export amounted to EUR 10 million. Predominant Exporter status provides tax relief for the company in form of more rapid VAT refund (within 15 days).

In addition, Predominant Exporter status may allow the company to get better financing terms with the Export Credit and Insurance Agency.

How long does the procedure of the Agency loan approval take?

Loan approval procedure takes up to 15 days.