Short-term Credit Insurance

Short-term credit insurance is a type of export credit insurance that mainly covers the risk of export trade receivables with a credit term of less than one year (usually 30 to 180 days, with a maximum of no more than 360 days). Its core function is to compensate the exporter for losses according to an agreed percentage when the buyer goes bankrupt, defaults on payment, refuses to accept goods, or when political risks occur in the importing country (such as war or foreign exchange controls). Use cases include: export transactions settled by non-letter of credit methods such as open account (O/A), documents against acceptance (D/A), or documents against payment (D/P), and it is especially suitable for small and medium-sized enterprises or when exploring emerging markets. Precautions: enterprises should note that insurance does not cover all losses (the compensation ratio is usually 80%-90%), and a buyer credit limit must be approved in advance; after insuring, they should continuously monitor changes in the buyer's creditworthiness and declare exports on time. The difference from 'medium- and long-term credit insurance' is that the latter covers terms exceeding one year and is mostly used for large complete equipment or overseas engineering contracting projects; compared with 'factoring', credit insurance does not involve financing or accounts receivable collection and only provides risk protection.