New extended risk cover unlocks faster pay­ments in export deals

Guarantees that reduce the risk of export invoice discounting for banks have been a key offering of EKN since1933.

“Liquidity is the lifeblood of global trade. Without it, even the strongest businesses can struggle to grow. Our guarantees help businesses accelerate cash flow and improve financial resilience,” says Lotta Danielsson, Deputy Head of Business Area Large Corporates at EKN. “We know that many large corporations are selling off accounts receivables to bolster their KPIs.”

By launching a new extended risk cover on selected guarantees, EKN significantly enhances their attraction to both lenders and businesses, at a time when tariff threats and trade friction threaten to put a wet blanket over the export finance system.

The reduced appetite among banks for invoice discounting and advance payouts, however, began already a few years ago. “We have witnessed how banks have grown less inclined to discount export bills—not because they doubt Swedish exporters, but due to stricter capital adequacy rules."

Since the standard Loss on Claims Guarantee is not valid if the exporter has failed to fulfil the contractual obligations, the bank is required to account for invoice discounting as a business risk on the books. With the new extended risk cover from EKN, however, the bank can book the commitment as a risk of default on part of the Swedish government, which is rated AAA.

“This means a completely different risk profile. The bank gets an unconditional, on-demand guarantee from EKN, ensuring that any valid claim will be settled swiftly—regardless of where the fault lies.”

This removes a major hurdle for banks, making it easier for them to provide liquidity to exporters. “It’s a straightforward proposition: less risk for banks, faster payments for exporters – and ultimately, a boost to the global competitiveness of Swedish exporters,” Danielsson adds.

Exporters must apply for the extended risk cover and pay a small premium. However, Danielsson expects the overall cost impact to be minimal. “Given that the risk to the bank is significantly reduced, the cost to the exporter should ideally remain the same—or even decrease. If the bank is taking zero risk, that should be reflected in the pricing,” she notes.

With a standard guarantee, export credits are usually added on top of a customer’s existing credit line. As this is not the case if the guarantee comes with the extended risk cover, the credit limit may instead be used to beef up working capital and strengthen liquidity.

"At EKN, we are committed to providing guarantees that are both easy to use and highly valuable to banks and exporters alike. The new extended risk cover represents a significant step forward, and we expect it to create tangible benefits for all our partners and customers."

As the new product shifts risk from the beneficiary to EKN, the ability of the exporter to fulfil its obligations will be investigated, particularly if the transaction involves a new product or untried technology. The exporter must also have been in business for at least two years.

"Risk assessment is what we do best. We are familiar with this extended risk through our experience with other guarantees, as well as the potential increased risk of fraud. These are challenges we are well equipped to handle," Danielsson states.

Finally, more attractive risk cover may help bring new players – and more capital – into the export finance system. “Niche banks, fintech players and financial institutions specialised in factoring may become more interested in financing exports with the presence of this new extended risk cover.”

By eliminating a key barrier to invoice discounting, EKN aims to make it easier for businesses of all sizes to manage cash flow, grow exports, and compete globally—without being held back by financing constraints.