What is covered here is not an unpaid receivable, it is the cause of an unpaid receivable, and that sentence contains the whole difficulty of the trade. The insured must establish that its buyer did not pay for a political reason, while the person holding that information is precisely the one with the least interest in giving it. A buyer in difficulty has everything to gain by keeping quiet, and more still by invoking a commercial grievance: non-conforming goods, late delivery, poor after-sales service. That allegation, even a weak one, turns a political risk file into a commercial dispute, that is, into an exclusion. The buyer's silence is therefore not a void, it is a position.
The first useful reflex is to give up on the single document. There almost never exists a paper saying that this buyer could not pay this invoice for this reason. What exists is a body of evidence, and it is worth something by its convergence rather than by the strength of any one strand. A dated administrative circular, proof that the buyer's transfer application was filed and rejected, the finding that three other suppliers to the same sector have been unpaid since the same week, and the demonstration that the buyer keeps paying its local suppliers: none of these proves anything alone, and together they leave no other reading.
The most decisive strand is also the most counterintuitive: showing that the buyer has money. A debtor paying its wages, its local suppliers and its taxes, and failing to pay only its foreign creditors, describes a transfer constraint and not insolvency. Conversely, a debtor that has stopped paying everyone is in commercial failure, whatever crisis surrounds it, and no circular will change that reading. This is why local information, accounting and commercial, weighs more in these files than regulatory documentation, which anyone can produce and which says nothing about this particular debtor.
One must then know that the value of evidence decays with time in a way the policy's deadlines do not reflect. A bank statement, a local agent's attestation, an email from the buyer's finance department are obtained in the first month and become unreachable by the fourteenth, not because they have disappeared but because the relationship that allowed them to be asked for has cooled, and because the contact who would have supplied them has been replaced. Building the file is therefore not work that follows notification: it is work contemporaneous with the non-payment, and it starts before one knows whether there will be a claim at all.
Then comes the point where many exporters lose their file while believing they are building it: how the buyer is approached. A formal demand asking the reasons for non-payment calls for a written answer, and that answer will contain a commercial grievance because it is the only one that protects the buyer. One will thus have manufactured oneself the document the insurer will invoke. The useful request bears on verifiable facts and not on reasons: proof of the local currency deposit, the registration number of the transfer application, a copy of the bank's refusal. Those documents establish the cause without ever asking the buyer to characterize it.
A word finally on what does not suffice, because it is what one produces spontaneously. The press clipping, the country note, the downgrade of a sovereign rating describe a context and attach nothing to this debtor. They have their place at the opening of a file, never at its centre. An insurer receiving twenty pages of context and no document naming anyone reads an empty file, and is right to read it that way: the cause of default is a question about a person, not about a country.
The method therefore amounts to few steps, and they are all early. Document the debtor's situation while it is still observable, looking first at what it keeps paying. Assemble the administrative text AND the trace of its application to this transaction, because either without the other proves nothing. Look for comparables among other suppliers, which cost a phone call and are worth an expert report. And never put to the buyer a question whose honest answer would cost it less than the convenient one.
An exporter has been unpaid 1.9 million euros since April 12. The buyer, a private company, has not responded since March. A central bank circular dated March 3 restricts currency transfers to so-called essential imports, and the goods delivered fall into a category whose classification is arguable. The exporter's local agent reports that in April the buyer paid its wages and two local suppliers, and that two other European suppliers to the same sector have been unpaid since March. The exporter's legal department is about to send a formal demand asking the buyer to set out in writing the reasons for non-payment. What should be done?
The formal demand as drafted is the most dangerous step in the file, and it must be stopped today. Asking a silent buyer in writing to set out its reasons is inviting it to choose the version that protects it, and that version will be a commercial grievance about conformity or delivery times: the exporter will have manufactured for itself the document its insurer will raise as a commercial dispute, that is, as an exclusion. The circular, next, proves nothing on its own, and that is the second trap. It describes a regime, it does not say that this transfer was refused, and the arguable classification of the goods delivered is enough for the insurer to maintain that nothing prevented payment. What is missing is the trace of its application to this case. What must be assembled comes in three converging strands. The buyer's transfer application, its registration number and its refusal, which are requested as facts and not as reasons. The April payments of wages and local suppliers, which establish that the buyer has funds and rule out commercial failure, and that is the decisive strand. And the two European suppliers unpaid since March, whose confirmation costs two phone calls and is worth an expert report. These items are obtainable now and will be unreachable in the fourteenth month, when the relationship has cooled and the contact has changed.
- 01What is covered is the cause of default, and the only party that knows it has an interest in silence or in a commercial grievance.
- 02No single document proves it: a body of evidence works by convergence, the administrative text AND the trace of its application to this case.
- 03The decisive strand is showing the debtor has money: paying local suppliers and not foreign creditors describes a transfer constraint.
- 04Evidence expires as the relationship cools: what is obtainable in the first month is unreachable in the fourteenth.
- 05A formal demand asking the reasons for non-payment manufactures the commercial grievance the insurer will raise: ask for facts, never for reasons.