Contract Guarantee requirements and conditions

What does a Contract Guarantee cost?

EKF charges a premium for issuing a Contract Guarantee. We calculate the premium based on the overall risk of the specific export transaction: 

  • Industry analysis:EKF assesses the situation and the opportunities in your industry.
  • Term of the guarantee:The term reflects the credit period of the guarantee. The shorter the term, the lower the premium.
  • The buyer's credit rating:EKF assesses your customer's credit rating, i.e. the likelihood that the customer will pay. The higher the credit rating, the lower the premium.
  • The political situation in your buyer's country:EKF assesses the risk of political unrest in your customer's country. 

Coverage amounts of less than DKK 25 million are based on EKF’s premium model. For amounts of more than DKK 25 million, EKF determines the premium on the export order on a case-by-case basis.

Price example

A one-year Contract Guarantee to a South African buyer with the lowest acceptable credit rating is 1.5 per cent of the risk amount for up-front payment.

Who is eligible for a Contract Guarantee?

Danish export companies.

EKF must rate the foreign buyer as creditworthy to issue a guarantee.

How much does a Contract Guarantee cover?

No limit applies to the amount covered by a Contract Guarantee.

What is the term of the Contract Guarantee?

The term depends on the risk period for the project, which may be short or long, however, minimum six months.

How long is the credit period?

The general rule is regular payments with a maximum credit period of 90 days.

What does EKF cover?

You are responsible for collecting the debt, and must be able to prove that you have a claim against the debtor in order to seek compensation.

EKF pays compensation if you make a loss on an export transaction as a result of commercial or political risk

Commercial risk occurs when your buyer is unable to pay due to liquidation, insolvency or cancellation of the contract, or if the buyer is unwilling to pay.

Political risk occurs when you do not receive payment for products due to impediments in the country you are exporting to. Such impediments include war (external armed conflict and domestic political violence), currency shortage, restrictions on use of currency, import or export bans, and interventions by local authorities that make it impossible to receive payment for the products.

EKF generally pays a maximum of 90 per cent of the loss in compensation to your company. You must therefore cover a deductible of at least 10 per cent.

A Contract Guarantee covers these specific losses:

  • Expenses to date less earnings from sale of the manufactured products.
  • Expenses pertaining to dismantling equipment and shipping it back to Denmark.
  • Invoices, which the buyer has not yet paid.

Environmental and social sustainability requirements

When your company's business with EKF totals more than DKK 25 million we assess your company's approach to the environment and human rights