Stop Loss: Bpifrance’s new foreign exchange trade insurance supports entrepreneurs in their will to export
In conducting over-the-counter trades, a buyer sometimes imposes an offer in a foreign currency to sign the contract. This foreign exchange trade insurance allows the company to set the forward rate of the currency in order to stabilize proceeds in that currency. The insurance thus neutralizes foreign exchange risk for French companies.
The new stop-loss foreign exchange trade insurance was launched in April 2021 and is designed to cover the period of commercial negotiations for French companies’ international operations. This solution allows companies like Sercel, to protect themselves against a significant exchange rate loss during the bidding phase and maximizes their chances to win over the contract.
How does “Stop Loss” change the game in business export?
During negotiations, the exporting company may be confronted with two risks if they issue their offer in euros. On the one hand, they could be losing the market because euro is not competitive enough in the face of international competition. And on the other hand, they could have to revise their commercial offer at the request of the buyer at the last moment to propose a price in foreign currency rather than the euro. This could then represent a risk not being able to hedge under good conditions.
Sercel, the 60-year-old French company truly understood the importance of a foreign exchange insurance. The world’s leading designer and manufacturer of innovative seismic equipment and reservoir monitoring instruments generates most of its sales from exports. In 2021, they reached out to Bpifrance for help in submitting a commercial offer in a specific currency, the Indian rupee.
The implementation of Bpifrance’s Stop Loss negotiation insurance enabled Sercel to offer a price in local currency, as imposed by the client, and to win the contract over the sale of seismic sensors and recorders for the Indian market. This only enhances how solutions such as those offered by Bpifrance Assurance Export can be essential for businesses wanting to export.
How does Bpifrance Assurance Export support entrepreneurs?
Bpifrance Assurance Export, the French Credit Agency, manages public export guarantees on behalf of and under the control of the State. Through its role as a French Export Credit Agency, it helps French companies by facilitating their export capacity and improving the attractiveness of their offers to their foreign customers.
Bpifrance’s Credit Agency gathers experts who are dedicated to accompanying businesses in their international trades in more than 40 currencies. Thanks to Bpifrance’s foreign exchange insurance, the risks of foreign exchange losses are neutralized, and the commercial margin is secured. French exporting companies also gain in competitiveness since they are able to submit their commercial offers in the currency of their foreign buyers.
Find more about our export credit insurances here: Export Credit Insurance – Bpifrance.com