THE CHALLENGES OF EXPORTING PLANTS: REQUIREMENTS, EXTENDED PAYMENT TERMS AND RISKS TO MANAGE
The export of industrial plants has distinctive characteristics: multi-year contracts, long production cycles and significant investments by buyers. In many high-potential markets — such as Latin America, Asia and the Middle East — demand is dynamic, but access to local credit remains limited, with high interest rates and scarce availability of medium- to long-term financing.
For this reason, Italian companies must find a balance between three key needs:
- offering extended payment terms requested by customers
- protecting themselves against the risk of non-payment
- preserving liquidity and investment capacity
These dynamics often take place in contexts characterised by political uncertainty, regulatory instability and strong competitive pressure. Without appropriate mitigation measures, these factors can jeopardise even well-structured transactions.
The most frequent operational risks include debtor insolvency, contractual default, revocation or dispute of the supply, as well as delays, discrepancies and documentation issues that slow down collections.
These are compounded by political risks such as moratoria on international payments, currency controls, institutional instability or internal conflicts, which may prevent the transfer of funds even when the buyer is solvent.
Finally, transactions based on bills of exchange require full compliance with local legal standards: formal errors relating to the format of the instruments, signatures or payment domiciliation may undermine the validity (in technical terms, “enforceability”) of the credit and reduce the effectiveness of guarantees.
Together, these elements highlight the need to adopt structured financial instruments capable not only of protecting receivables but also of strengthening the commercial offer in a competitive global context.
WHY BUYERS REQUEST LONGER PAYMENT TERMS
In high-potential international markets — such as Mexico, India, China and Turkey — access to local credit is often costly or insufficient to support major industrial investments. As a result, customers request more extended financial terms that allow them to spread the economic commitment over several years.
In this scenario, competitiveness depends not only on the product or price but also on the exporter’s ability to propose structured and sustainable payment solutions integrated with appropriate financial instruments.
In this context, supplier credit represents an effective tool to support exports because it enables exporting companies to offer extended payment terms to foreign customers without compromising their own liquidity.
It is a sophisticated solution, far beyond a simple instalment payment method, that structurally strengthens the commercial offer of the exporting company.
WHAT SUPPLIER CREDIT IS
Supplier credit is a form of export financing through which the exporting company grants the foreign customer medium- to long-term deferred payment, generally between two and five years, for the purchase of capital goods, plants, machinery or related services.
It is not merely a commercial payment extension. Supplier credit is a structured transaction that integrates banking, insurance and — in many cases — public support components. The exporting company provides for instalment payments within the contract, while the foreign customer undertakes to repay the value of the supply over time, including the agreed interest.
This instrument is particularly used in B2B transactions, typical of Italian exports in sectors such as capital machinery, industrial plants, energy and production technologies, unless the size or structure of the contracts justifies the use of other types of instruments, such as documentary credits or buyer’s credit. In these sectors, the possibility of spreading payments over time often represents a decisive condition for securing a contract.
Supplier credit, therefore, is not only a financial instrument but also a strategic component of the commercial offer, capable of strengthening the competitive positioning of exporting companies in international markets.
HOW THE SUPPLIER CREDIT MECHANISM WORKS
The functioning of supplier credit is based on a balance between the company, the bank and the guarantee system. Understanding how supplier credit works is essential to correctly assess the opportunities and risks of a structured export transaction.
The Italian company signs a supply contract with the foreign customer that provides for a partial advance payment (minimum 15%) and a deferred balance. The deferred credit is formalised through international bills of exchange — such as promissory notes or bills of exchange — representing the buyer’s commitment to pay according to an instalment schedule. A future evolution of the product will allow the credit to be represented solely by invoices, therefore without recourse to bills of exchange.
The transaction is supported by a guarantee, generally in the form of insurance coverage issued by SACE directly in favour of the exporter, which protects against political risks (such as currency blocks or institutional instability) and commercial risks (customer insolvency). As an alternative to SACE insurance coverage, corporate guarantees, bank guarantees or private insurance policies may also be used.
At this stage, the exporter’s bank intervenes by discounting the credit without recourse. This means that the bank advances to the company the amount of the deferred credit (net of discount interest and commissions), taking ownership of the credit itself without the possibility of recourse to the exporter. Before discounting, the exporter assigns ownership of the guarantee to the bank so that, in the event of non-payment, the bank itself can activate it.
In many transactions, SIMEST also intervenes by granting the exporter a public contribution that reduces the cost of the discount interest applied by the discounting bank. This allows the company to offer particularly competitive financial conditions to the foreign counterparty without passing on the costs of the credit mobilisation transaction.
It is therefore not surprising that, according to official SIMEST data, 170 transactions worth €525 million were completed in 2024, marking a 5% increase compared with 2023 and reaching a new historical record. A particularly significant figure is that around 60% of the companies involved in 2024 used the export contribution on supplier credit for the first time, signalling the growing diffusion of this instrument among SMEs as well.
WHAT ADVANTAGES FOR COMPANIES
The value of supplier credit lies in its ability to align the interests of the parties involved.
For the exporting company, the most evident advantage — in addition to the possibility of offering the importer a particularly favourable financial solution — is the immediate collection of the entire value of the supply through the non-recourse discounting of the deferred portion. This allows the company not to immobilise capital and to maintain its borrowing capacity, since the transaction is not considered a new loan. The exporter also transfers the risk of non-payment to the bank and the insurance provider, enabling it to operate with greater confidence even in complex markets.
For the foreign customer, the benefit is equally tangible. The buyer gains access to structured financing directly linked to the supply, often on more favourable terms than those available in the local market, partly thanks to the public contribution received by the exporter to offset discount interest. The possibility of spreading payments over time allows repayment to be aligned with the cash flows generated by the investment. Moreover, the particular structure of the transaction enables the importer to avoid using (or requesting) credit lines from local banks.
This balance represents the strength of supplier credit: an instrument that makes the investment sustainable for the importer and the transaction secure for the exporter.
