The suffering for the people of Ukraine cannot be described in words. It seems to be an action of Putin and a small elite beside him who desperately want to restore the old Soviet Union. They are silencing the Russian people while the majority does not support this terrible war.
Economic sanctions
To prevent escalation, a large number of (mainly Western) countries have decided not to intervene militarily, but to put pressure on Russia through huge economic sanctions. This means that both Russian individuals and companies have been added to sanctions lists, meaning you are no longer allowed to do business with them. Russian assets have also been frozen and several banks have been cut off from the SWIFT system.
For (Dutch) companies doing business with Russia and Belarus, this has a huge impact. Formally, you are no longer allowed to do business with a large number of companies and individuals on the sanctions list. But when companies are not on the sanctions list, how do goods get into Russia and do you get paid for them?
Reduce credit limits
Credit insurers (as in the COVID-19 crisis) first took stock of how much exposure insureds had on Russian companies. They reduced credit limits to the outstanding exposure so that they had to pay first before making any new deliveries. Currently, credit insurers no longer issue new credit limits on companies in Russia and Belarus. And meanwhile, they are also rapidly reducing the covers that had already been issued.
Be careful
The question, of course, is whether it is still moral to do business with (Belarusian) Russian companies. Xolv advises its relations to be very careful in case you do decide to supply goods. Of course, you must first check the sanctions lists which is a challenge in itself. Several lists circulate and they change by the day. In addition, you need to consider how you will get goods into Russia, and most importantly, how they will be paid for. Prepayment seems to be the only solution at the moment.
Advantage of credit insurance
The usefulness of credit insurance is again evident in this situation. Companies that have insured their receivables in (Belarus) Russia can be confident that they will receive their money. Payments are still coming from Russia (or through other countries), but if relevant buyers can no longer pay, the credit insurer will pay out. Another aspect is also important here. If for political reasons companies in Russia can no longer pay, credit insurers (provided you have political risk co-insured in the policy) will also pay out. This is subject to a waiting period of usually 6 months, but at least it means that they will pay relevant claims.
Conclusion
It is advisable to carefully consider which countries you export goods to and whether it is wise to cover political risks in addition to debtor risks. In the past, insurers have made payments due to foreign exchange shortages, among other things (Russia, Argentina). Xolv can assist you in identifying your risks and advise how to manage and cover them.
