Insights for associations, chambers and networks in Germany
Providing guidance | Facilitating market entry | Supporting exports
Her role as a driving force and trailblazer
Trade associations, federations, chambers of commerce and networks are often the first points of contact for businesses with questions about internationalisation. They help businesses make sense of developments, provide guidance and support strategic decision-making in international business. By incorporating export credit guarantees, you can expand your range of advisory and practival guidance services to include a government-backed insurance and financing instrument. In this way, you can strengthen your role as a competent point of contact for export-related matters – particularly amongst small and medium-sized enterprises.
How to support exporting businesses in Germany
International markets offer German companies significant opportunities. At the same time, economic and political risks are on the rise, geopolitical tensions are affecting supply chains and cash flows, and securing finance is becoming more challenging. It is German SMEs in particular, with their numerous technologically leading ‘hidden champions’, that shape the international competitiveness of the German economy. Many of these highly specialised and often family-run companies are successful worldwide and strongly export-oriented. At the same time, they face the challenge of tapping into new markets and diversifying their sales markets without jeopardising their financial stability.
This is where the Federal Government’s export credit guarantees (Hermes Cover) come into play. As a government instrument for the promotion of foreign trade, they protect German companies’ export transactions against economic and political payment defaults abroad and facilitate the financing of international projects – particularly in high-risk markets or with long credit periods. In particular, they help small and medium-sized enterprises to make international risks more manageable and to establish a broader and more resilient market presence.
What are export credit guarantees?
Export credit guarantees explained in 120 seconds
How German exporters benefit from Hermes Cover
Stronger position in international competition with easier access to financing
Export credit guarantees provide protection against commercial and political defaults. This enables companies to tap into new markets or those they have previously avoided, and to diversify their sales markets. Strategic decisions regarding internationalisation become more robust and easier to plan for the long term.
Improved financing options
When medium-sized enterprises grant their customers longer credit periods, this ties up financial liquidity whilst at the same time increasing the risk of default. Government-backed guarantees strengthen a company’s position with its main banks, facilitate the structuring of supplier or bank loans, and improve refinancing options. This ensures that companies remain financially viable even when undertaking larger projects.
Stronger position in international competitions
International customers often expect attractive financing options. Export credit guarantees enable companies to offer longer credit periods without tying up too much of their own cash flow. This significantly improves their chances in tenders and contract negotiations.
Cover for recurring export transactions
Many medium-sized companies supply their international customers on a regular basis over extended periods. With collective cover, such as wholeturnover policies (APG), such supply relationships can be insured for numerous countries. Credit limits are set for individual foreign customers. These provide planning certainty and facilitate continuous business growth.
Success story: textile dyeing machinery for Mexico
Thies GmbH & Co. KG, a fifth-generation family-run business, manufactures textile dyeing machines and exports them worldwide. The company carried out a project for a client in Mexico on the basis of a supplier credit.
To safeguard the transaction, the company used the digital product ‘hermes cover click&cover EXPORT’, which can be applied for very easily online. Approval was granted within a few weeks, enabling production to start at short notice.
Thanks to the government guarantee, the company’s excess in the event of default was reduced to 5 per cent. This example illustrates how small and medium-sized enterprises, in particular, can safeguard their international business and secure financial flexibility.
* German version only - please use subtitles
Better planning certainty for export business
A German manufacturer of agricultural machinery regularly exports to various countries outside the EU. Its customers include, amongst others, foreign clients in Ukraine, Colombia, Chile and South Africa. The agreed credit periods range from 60 to 360 days, depending on the market and the customer.
To efficiently hedge its ongoing export transactions, the company uses a wholeturnover policy (APG). This involves first concluding an APG contract and including individual export countries. Within the countries covered, export transactions with foreign customers involving credit periods of up to one year are covered.
The premiums are calculated on a risk-based basis and set for one contract year at a time. In the specific case of the agricultural machinery manufacturer, the average premium amounts to around 0.60 per cent of the covered turnover. The agreed premium rates apply during this period to all covered foreign customers – regardless of their size or the respective country risk. In the event of a claim, the company generally bears an excess of 10 per cent, whilst the majority of the risk is covered by the Federal Government. This enables the company to benefit from greater planning and costing certainty, reduced administrative burden and greater financial flexibility in its day-to-day export business.
Our services for your organisation
We can help you communicate the topic of export cover to your member companies in a practical and accessible way. You’ll benefit from:
- Practical webinars for your German exporting companies
- Ready-to-use text modules for your website, newsletter or member communications
- Direct contact with our experts at home and abroad
- Up-to-date information in our Export Insights, Export Spotlight and Export Events newsletters
This allows you to expand your range of services for exporting companies to include the established instrument of promotion of foreign trade – Export Credit Guarantees of the Federal Republic of Germany.
Webinars for your German exporters
At the heart of our offering are free webinars, designed specifically for small and medium-sized enterprises. Your members will gain direct access to government expertise on all aspects of export cover and financing. As well as covering the basics, the webinars address specific issues and typical project scenarios.
Our experts provide practical guidance on
- how to systematically prepare for entry into new international markets,
- how to mitigate economic and political risks,
- how to structure export transactions to ensure they are financeable,
- and how to support projects from the initial idea right through to completion.
Our financing experts also contribute their experience from the relevant markets and analyse current developments. This fosters a dialogue that goes beyond a mere information session.
Specific projects or questions from companies in your network can also be addressed. The webinars are individually tailored to the sector and level of experience.
Resources for your communications
What are export credit guarantees (Hermes Cover)? (Short and long versions)
Short description:
Federal Government export credit guarantees – government protection for international business
Federal export credit guarantees (Hermes Cover) are a government instrument for the promotion of foreign trade. They protect export transactions by German companies – particularly small and medium-sized enterprises – against economic and political payment defaults abroad. Both individual project-based transactions and new or ongoing supply relationships can be covered.
They are primarily used where there are heightened country risks, where private insurance solutions are insufficient, or where long-term credit periods are required. For small and medium-sized enterprises, this means extended and improved planning certainty and improved financing options for export projects into foreign markets. For German companies, this means that cover by export credit guarantee should form part of the tender strategy – rather than being a subsequent covermeasure.
Long text:
Export credit guarantees of the Federal Government – government protection for international business
Export credit guarantees (Hermes Cover) are an instrument of the Federal Government's promotion of foreign trade. They serve to protect export transactions against economic and political payment defaults abroad. Both individual supply or project transactions and ongoing export transactions can be covered.
For small and medium-sized enterprises, international projects often present particular challenges: limited risk buffers, dependence on individual markets or restricted financing options. Payment defaults or political events in the buyer’s country can have a significant impact on liquidity and stability.
Economic risks arise, for example, from the insolvency or late payment of a foreign buyer. Political risks may result from government measures, transfer restrictions, war or other events that prevent the fulfilment of the contract.
Cover is provided by the Federal Republic of Germany and is used in particular where there are heightened country risks, private insurance cover is insufficient, or long-term credit periods are required. In addition to providing risk cover, export credit guarantees play a key role in making export transactions bankable, as they offer banks additional security.
The aim is, in particular, to facilitate access to international markets for small and medium-sized enterprises, to enable diversification and to ensure that international projects can be implemented in a predictable manner.
Outlining the benefits for businesses
What are the benefits for exporting companies?
Export credit guarantees enable small and medium-sized enterprises in particular to conduct international business, even in challenging or new markets.
In addition to individual project-based transactions, recurring deliveries to international customers can also be covered by blanket guarantees. This provides planning certainty for ongoing export relationships.
Thanks to the government guarantee, potential payment defaults become predictable. This reduces business risks and facilitates strategic decisions regarding market expansion or diversification.
A key advantage lies in financing: SMEs often rely on support from their main bank. The government Guarantee improves the creditworthiness of the export transaction, facilitates the structuring of supplier or bank loans, and creates additional financial flexibility – particularly in the case of long-term credit periods.
Furthermore, this protection strengthens a company’s competitive position in the international arena. Companies can offer attractive payment terms without placing a disproportionate strain on their own liquidity.
For SMEs, this means greater security, better financing and more realistic opportunities in international projects.
Context: When are export credit guarantees particularly relevant?
Export credit guarantees are particularly relevant for small and medium-sized enterprises when:
- they wish to enter new or hitherto under-developed markets,
- sales markets are to be diversified,
- ongoing supply relationships with international customers need to be secured,
- larger project-based deals are to be implemented,
- international customers expect long-term credit periods,
- private coverage options are insufficient.
Particularly for small and medium-sized enterprises, they help to implement internationalisation in a structured and risk-aware manner – without jeopardising the company’s own stability.
Short text for newsletter/teaser
Export credit guarantees – protection for international business
International markets offer opportunities, but they also involve economic and political risks. The Federal Government’s export credit guarantees safeguard German companies’ export transactions and facilitate financing – particularly in the case of long-term credit periods or heightened country risks. For German companies, this means that the export credit guarantee should form part of their tender strategy – rather than being a subsequent covering measure.
Further information can be found here: www.exportkreditgarantien.de/en
FAQ for German exporting companies – Frequently asked questions about the Federal Government’s export credit guarantees
Who is eligible for export credit guarantees?
In principle, German companies can applyfor export credit guarantees. In practice, however, this scheme is specifically aimed at small and medium-sized enterprises that supply goods or provide services abroad. As a rule, applicants must have an economic link to Germany.
What risks are covered by export credit guarantees?
They cover commercial risks (e.g. insolvency or refusal to pay by a foreign buyer) as well as political risks (e.g. transfer restrictions, government intervention or acts of war). For small and medium-sized enterprises in particular, such risks can have a significant impact on liquidity and stability – the government Guarantee significantly reduces this risk.
For which export transactions are export credit guarantees suitable?
Export credit guarantees are used in particular for supply and project transactions involving elevated country risks, long-term credit periods or complex financing structures. In addition to individual transactions, existing and regularly recurring supply relationships can also be covered by blanket export guarantees. They are therefore suitable for both individual projects and long-term supply relationships with international customers. Eligibility is assessed on a case-by-case basis.
Why are export credit guarantees particularly relevant for small and medium-sized enterprises (SME)?
Small and medium-sized enterprises often have smaller risk buffers and limited options for private risk cover. At the same time, they are often more reliant on financing solutions when conducting international business. The government Guarantee facilitates access to finance, reduces the risk of default and enables SMEs to tap into new markets and broaden their business relationships.
How does the application process work?
The application is submitted to Euler Hermes AG, acting as the Federal Government’s agent. Following an assessment of the economic, political and environmental or social aspects, the Federal Government decides whether to provide cover. It is recommended that you seek advice at an early stage to clarify the structure and eligibility of the export project in advance.
Further resources for your members
To enable companies within you organisation to find further practical material quickly and efficiently, we provide practical content and specific guidance:
- Getting started for SMEs
A concise guide for small and medium-sized enterprises: When do export credit guarantees make sense? What options are available? How do you get started? - Product Finder
Find the right cover in just a few steps: the product finder helps you categorise specific export projects from the outset. - country information
A clear overview of cover policies and conditions in individual countries – an important basis for strategic market decisions. - Case studies
Specific project deals demonstrate how companies are tapping into new markets and successfully securing international projects. - Financing experts abroad
Direct contact with experts possessing regional market knowledge – for addressing specific issues on the ground - Business advisers
Personal support from the initial enquiry right through to the implementation of the export transaction - Events
Overview of knowledge resources, webinars and specialist events
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