Trade insurance in Lithuania

Question posted by Jennie Craddock, on behalf of Smart-e in RH5

As manufacturers we can not get trade insurance to deal with a company in Lithuania. This company is a very good customer and we want to be able to continue business with them and offer trade credit, how can we achieve this?

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good afternoon, have you tried speaking with your local export trade finance adviser? this is a new scheme from the UK Export Credit guarantee department.

http://www.ukexportfinance.gov.uk/cont_us/export-finance-advisors

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Jennie Craddock, on behalf of Smart-e in RH5.

Hi Mathilde,

We haven't yet come across this website, the new scheme and our local adviser is something we will investigate, thank you very much for your response.

Jennie

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Christopher Willers, on behalf of Access to Export Ltd in CB21.

Dear Jennie
Have you considered using Letters of Credit (L/C) as this would provide a secure method of payment and would alleviate the need for credit insurance. The L/C could be established as a usuance L/C to give your customer the same credit period as you currently give. If you would like to explore this option in more detail please feel free to give me a call on 01223 890767 for a no obligation exploratory chat.
Kind regards
Chris

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Hi Jennie,

We have a number of customers who have credit insurance cover in Lithuania, is the issue with the country or with the creditworthiness of your customer?

If we had some more details I am sure we would be able to be of some sort of help.

Steve

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Ian Nash, on behalf of Santander Corporate & Commercial in Reading.

It is possible to get credit insurance on Lithuanian companies but does depend on how strong they are and if it is a single company being insured. Alternatively you could look at Letters of Credit or Avalising Bills of Exchange as options. Both of these are getting a bank to guarantee the payment which you could then use to get credit on if required. The non insurance route will give more certainty of payment as once agreed it can not be withdrawn where credit insurance can change, particularly if you are only dealing with a small range of companies or a single country. This is not to say that Lithuania is unstable.

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Sandra Strong, on behalf of Strong and Herd LLP in M22.

Hi Jennie

Having contacted a number of mainsteam UK banks, and asked them about their current appetite/ willingness to underwrite/confirm Lithuanian bank risk, I am sorry to report that none of them have any appetite to do so at the current time. One of the banks contacted, often has the ability to add their confirmation to territories that may be perceived as more challenging, in terms of political/economic/soveriegn risk, but unfortunately at this moment, they are unable to assist with Lithuania. Since I am not aware of the amount or regularity of this business, I am unable to contact any of the more specialist banks/trade finance houses who may be able to accommodate Lithuanian risk.

In my opinion, I would suggest the possibility of using a Standby Letter of Credit, issued by a Lithuanian bank to support regular, on-going sales. Although it is unusual to request a UK financier to add their confirmation to a Standby Letter of Credit, it is entirely possible, but as mentioned above, the challenge is to find a suitable one, who is able to do so, at an acceptable cost. If this does not prove possible, it is still feasible to seek the comfort of a Standby Letter of Credit, but it must be understood that the risk sits with the Lithuanian bank and any associated political and economic risks

Happy to provide mer asistance if you wish - our specialist is Richard Casburn on richardc@strongandherd.co.uk more information on Richard at http://www.strongandherd.co.uk/webpage.php?pid=10587&page=Associates

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