Content

 

Application Procedure

From making the application to receiving the money

The exporter should get in touch with Euler Hermes as early as possible - i.e. while negotiations are still going on and in any case before signing the export contract. A provisional offer of cover can be issued even before the contract is signed. Your Euler Hermes partners should also be informed immediately if there are any payment delays.

Making an application

The exporter or the bank which is financing the export transaction applies to Euler Hermes for export guarantee cover. It facilitates fast processing of the application if the applicant encloses material from a credit information agency, if available. In the case of applications exceeding a value of EUR 15 million, a memorandum giving details of financing, infrastructure, environmental aspects and the macro-economic significance of the project is also required. If you have any questions, the staff of Euler Hermes will be happy to answer them.

Applications should be made at as early a stage as possible, at any rate before the risk to be covered has commenced. For capital goods, it is recommended to submit an application while negotiations are still going on. In this way the exporter can clarify the situation as to the eligibility of his project for cover at an early stage of negotiations.

Granting cover

An "offer of cover in principle" issued by the Federal Government is binding: If the transaction complies with all the criteria stipulated in this offer – with no changes in substantive or legal status – the acceptance of cover is guaranteed in the event of the export contract and, where necessary, the financing loan contract being signed. Where contracts are put out to tender, the offer of cover in principle gives the exporter the necessary basis to negotiate from a secure position.

After the export contract and, where appropriate, the financing loan contract have been signed, a decision is made on whether to confirm the granting of cover. If this results in a positive decision, the Federal Government concludes a contract of guarantee with the insured and issues a declaration of guarantee.

This Export Credit Guarantee Declaration contains all the details material to the cover decision, such as the type and amount of risks insured and a description of the business transaction.

What happens when there is a loss?

If there are delays in payment, the exporter should get in touch with Euler Hermes as soon as possible in order to decide together with them how to proceed in the specific case in question. It is the responsibility of the insured to take any measures necessary in order to collect the debt.

If the receivables due under the export transaction are not paid as contractually agreed, the exporter or the bank submits a claim for indemnification to Euler Hermes. When examining a claim, the consortium checks whether the export transaction was carried out in compliance with the conditions of the guarantee. The insured will receive indemnification within one month of the claim being ascertained. At this point the claim, in the amount indemnified, is subrogated to the Federal Republic of Germany. The exporter or the bank retains the uninsured percentage for its own account.

Only legally valid receivables can be indemnified. If a foreign debtor disputes his liability to pay, the Federal Government is entitled to suspend indemnification pending final clarification.

In the event of a threatening loss, the Federal Government, the exporter, the financing banks and Euler Hermes are often successful in their concerted efforts to stabilize projects which have got into economic difficulties, thus – at least partially – avoiding the need for indemnification. Restructuring of the debt is often possible, usually by a deferral of repayments.

The Federal Government participates in the costs, e.g. court costs or lawyers' fees. In the case of political claims, the Federal Government attempts to recover the sums indemnified, as a rule in the form of a rescheduling agreement with the country concerned.

top

 

Footer