Curious about the state Hermes Cover

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Hermes Cover is an instrument of state foreign trade promotion. The range of cover extends along the entire value chain.

At the ProduktionNRW event, participants learned about the many possibilities offered by export credit guarantees, also known as Hermes Cover.
In order to bring the thematic diversity of export credit guarantees closer to the mechanical and plant engineering sector in NRW, ProduktionNRW offered a virtual event on 29 September 2021. The aim of the event was to offer an introduction to Hermes-covered export financing to companies that have little experience with this topic.

In this context, Hermes Cover is an instrument of governmental foreign trade promotion. This instrument comes into play when there is no appropriate or sufficient cover available from the private sector. Consequently, the Federal Government's Hermes Cover concentrates on export-oriented business with developing and emerging countries. In addition, they can be used to open up markets that are difficult to access and to maintain business relations in difficult times.

Dr. Susanne Engelbach, a consultant in the VDMA's foreign trade department, presented the current use of Hermes-covered export financing. Accordingly, 16.7 billion euros in new Hermes commitments were issued for the corona year 2020. Thereby, the payment terms and the export volume differ. Platforms for export financing were also presented.

Eva Stupp, company consultant of Euler Hermes Aktiengesellschaft, then went into the basics of export credit guarantees, forms of cover, requirements, fees and charges as well as the application procedure for Hermes cover in her comprehensive presentation:

  • The Federal Government's export credit guarantees provide cover for political and economic risks in export transactions of German exporters by the Federal Republic of Germany. Eligibility for cover depends on the eligibility of the export transaction for cover and its justifiability in terms of risk. Above a certain volume, an interministerial committee decides on the eligibility of applications for cover. Euler Hermes can also decide on many applications itself as mandatary.
  • Euler Hermes Aktiengesellschaft distinguishes between collective cover, individual cover, special offers for sectors such as construction or services and supplementary forms of cover. Risk cover for the manufacturing phase is also offered.
  • An eligible project should essentially consist of German goods. The calculation is based on the non-preferential concept of origin. If foreign parts are used in the product, a valid justification is required in the application from 49 percent and the eligibility for funding will be decided on a case-by-case basis. However, other factors such as environmental, social and human rights aspects are also taken into account in eligibility.
  • The costs of Hermes Cover are made up of fees and risk charges that depend on the value of the contract. The risk fees mainly depend on the country category of the buyer country, the creditworthiness of the buyer and the risk period.
  • The terms of payment, type of goods, eligibility, share of possible foreign subcontracting, decision-making situation of the respective country, information on foreign customers, implementation risk and costs are taken into account when the application is made.

In summary, export credit guarantees contain several advantages for export enterprises. In addition to covering the economic and political risks of bad debt losses, they offer financial freedom through additional liquidity. In addition, the Federal Government offers a flexible arrangement of the various forms of cover - with sound advice as required. In addition, exporters can gain competitive advantages by offering their foreign customers favourable financing from Germany, for which the Federal Government provides the basis of cover.

Organiser

The event was offered by ProduktionNRW. ProduktionNRW is the competence network for mechanical engineering and production technology in North Rhine-Westphalia and is run by the VDMA NRW. ProduktionNRW sees itself as a platform for networking, informing and marketing companies, institutions and networks among themselves and along the value chain. Significant parts of the services provided by ProduktionNRW are funded by the European Regional Development Fund (ERDF).