The Sri Lanka Export Credit Insurance Corporation (SLECIC) is beginning to see more claims being lodged as exporters are experiencing delayed or defaulted payments.

"We are just about beginning to experience a growing trend of claims as buyers delay or default payments to our exporters," Mohan Silva, Asst. General Manager-Marketing SLECIC, told the Island Financial Review.

"We don not have any data by way of the number of claims lodged with us because this phenomenon is fairly recent. As time goes on we will be able to compile enough information to show the extent to which buyers default our exporters. For now, however, we can only say that the problem is growing," Silva said.

According to the export stimulus package proposed by the government, one of the criteria to qualify for a hand-out is to receive payments within a reasonable period of time.

Exporters said this is an unrealistic requirement as contracting economies in countries importing from Sri Lanka are causing buyers financial difficulties as they struggle to maintain orders and sell.

"There is drastic drop in sales and therefore a drop in orders placed by buyers, and this has led to delayed payments and eventually non-payment," Silva told exporters at a seminar on export credit risk insurance organised by the Sri Lanka Exporters Association, an affiliate of the Ceylon Chamber of Commerce.

He advised exporters to go for secured payment terms instead of opting for open accounts away from LC terms.

However, SLECIC does offer insurance cover on export contracts opened under open account terms, apart from documents against payment, and documents against acceptances.

Silva urged exporters to be vigilant and follow-up on payments, keep tabs on exposure on single buyers and build a spread of markets instead of focusing on a single country.

SLECIC is owned by the government and provides credit risk cover to exporters and covers commercial risks such as insolvency of the buyer, protracted default and non-compliance of the trade contract by the buyer.

SLECIC also covers non commercial risks such as hostilities, wars, insurrections, civil and political disturbances, terrorism and natural disasters which prevent buyers from making their payments.

Changes to government policies in a buyer’s country, changes to laws, import bans and economic difficulties that prevent buyers from exercising their obligations are also covered for by SLECIC.

Silva says the added benefits of obtaining an insurance cover from SLECIC is that exporters can obtain bank credit with the insurance policy as collateral.

Silva said debt collection services are also provided by SLECIC through its links with credit risk insurance companies (most government owned) in 41 countries.

Exporters who participated in the seminar said that SLECIC had delayed meeting claims in the past and also taking too long to provide evaluations on prospective buyers, which is another service provided by the corporation.

Silva countered this claim by saying the corporation has improved its operational efficiencies since of late and assured exporters a timely service.

Exporters have time and time again said the artificial exchange rate maintained by the Central Bank is eroding their competitiveness, threatening to lose markets which will be extremely difficult to win-over once lost.

Now, bank dealers say the market is short of rupee funds as dollars are being sold by the Central Bank to maintain a stable exchange rate.