Eximbanka SR

What it means

The Export-Import Bank of the Slovak Republic, Eximbanka SR, is a state-owned financial institution whose task is to support Slovak exports. Unlike commercial banks its main goal is not profit but helping exporters where the commercial market would not take the risk or would charge too much for it.

It provides three main types of service: loans to finance production for export, including for foreign buyers, bank guarantees, for example for a bid in a foreign tender or the return of an advance, and export credit insurance against commercial and political risks.

Insurance matters especially for exports outside the EU, where the risk is not only a buyer not paying but also political: war, regime change, a ban on transferring money abroad or expropriation. Commercial insurers often do not cover such risks at all.

How it works in practice

For exporters selling on deferred payment terms to riskier countries, we recommend comparing trade credit insurance from a commercial insurer with Eximbanka’s products. For short terms and OECD countries a commercial insurer is usually better value; for long terms and risky markets, Eximbanka.

An insured receivable also improves financing: a bank more readily accepts it as loan collateral or buys it under forfaiting. In large contracts Eximbanka’s products are often combined with a letter of credit and commercial bank financing.

In the accounts the premium is an expense and an insurance payout on non-payment is income booked against the write-off of the receivable. Where support takes the form of a subsidised loan or guarantee, it must be assessed whether it is state aid that needs to be recorded.

What to watch out for

The most common mistake is turning to Eximbanka only after a buyer has stopped paying. Only receivables not yet overdue, for which the company has met the policy conditions such as reporting delays in time, can be insured. Insurance needs to be arranged when the contract is signed.

Mind the policy terms too. A payout usually covers not the whole receivable but, say, 85 to 95 %, on condition that the company delivered according to the contract and followed the collection procedures. Insurance does not resolve disputes over the quality of the goods.