New guarantees offered by KUKE make it easier to obtain export contracts and secure their financing
Working capital guarantees, guarantees for repayment of liabilities towards suppliers and supply chain financing guarantees - KUKE offers a new set of instruments for exporters that will help them, among others, obtain additional funds from banks and factoring companies to finance their growth and overseas expansion.
KUKE introduces successive solutions as part of a new system of support for exporters, which enable them to obtain funds for development and also strengthen their credibility in relations with business partners. These are completely new and modified types of insurance guarantees granted with the support of the State Treasury. One of them is the payment guarantee, thanks to which exporters secure timely payment of liabilities towards their suppliers, regardless of whether the supplier is a domestic or foreign entity.
"These payment guarantees allow Polish exporters to obtaining favourable payment terms, e.g., long-term trade credit, thus reducing their costs, while the supplier is certain to receive payment for the shipped components or materials, as the guarantee provides the highest security of trade. With the KUKE guarantee, Polish companies gains an excellent tool for negotiating supplies on better financial terms with domestic as well as foreign partners. However, if the latter prefers the guarantee of a well-known local bank, KUKE can re-guarantee such transactions, securing the exporter's obligation. Experience gained by Polish companies during the pandemic, which had to seek production parts from foreign suppliers, shows the usefulness of instruments designed to maintain liquidity and certainty of supply. Due to the crisis, many sub-suppliers lost credit limits for Polish companies under their credit insurance contracts. Thanks to this solution, Polish exporters are able to recreate such limits on their own and achieve a similar effect" - explained Krzysztof Kwaterski from the Insurance and International Cooperation Department of KUKE.
Another new instrument is the liabilities repayment guarantee for financing the supply chain of export production. It secures the repayment of exporters’ obligations to institutions financing invoices issued by the exporters’ suppliers.
"It significantly improves the liquidity of our exporters by extending the deadline set for the repayment of liabilities, when a financial institution pays an invoice issued with a 14-day payment term and the exporter settles the amount, e.g., after 60 days. We assume that factoring companies will most often appear here as financing institutions, which can use KUKE guarantees to secure financing obtained for themselves from banks. And the exporters may in this way extend the repayment of their liabilities to their domestic or foreign suppliers" - pointed out Krzysztof Kwaterski.
So far, KUKE customers have eagerly used yet another type of guarantees - those relating to the repayment of short-term loans financing export contracts. However, their construction has been changed so that they can cover practically all of an exporter's current assets, and not only those used to finance a specific contract. An ideal solution for every exporter has been created: supporting the acquisition from banks of working capital loans so frequently used by companies on a daily basis, as well as enabling problem-less increase of the already existing limits.
"By creating this guarantee offer, we wanted to kill several birds with one stone. Exporters are given a tool to strengthen relationships with their suppliers and obtain better payment terms from them. In the relations with banks or factoring companies, they can significantly increase the amount of available financing. KUKE guarantees reduce the use of the bank limit granted to the exporter by 80 percent. On the other hand, the bank can increase its involvement in financing a given exporter as much as five times using KUKE guarantees or counter-guarantees, and thus improve its profitability from the relationship with the customer. On the scale of the whole economy, this means a more effective use of banks' capital and a strengthening of Polish exporters and their potential in international markets", explained Piotr Maciaszek, Director of the Insurance and International Cooperation Department at KUKE.
The system of support for exporters, including payment guarantees, is available to entrepreneurs who can prove that in at least three of the last five years, revenues from foreign sales accounted on average for at least 20% of their total revenues. New exporters will have to demonstrate this share of exports in their sales in the first three years. Of course, it is also possible to obtain a guarantee to secure financing and supplies for a specific export contract.
KUKE assesses the credibility of the company and grants it a limit up to which all three types of guarantees can be issued. The limit is set for a period of one year, after which the fulfilment of the criteria will be verified. All three types of guarantees cover up to 80 per cent of the exporter's liabilities, and the repayment period for liabilities secured by these guarantees may not exceed 719 days.
Importantly, the procedures for obtaining guarantees have been simplified and all documentation is limited to a general or individual contract signed with the exporter.