Selling to customers outside Canada brings extra risks. Late payments, buyer defaults, or sudden government action can all hurt your cash flow. Choosing between EDC credit insurance, accounts receivable insurance, and political risk insurance depends on where your risk comes from: your customer, your finances, or the country where you do business.
This guide explains how each product works, who uses them, and how Canadian exporters often combine them.
These insurance products protect against different types of problems:
Export Development Canada (EDC), Canada’s export credit agency, offers all three types of insurance, sometimes with private insurers.
Best for: Canadian businesses selling on credit terms to domestic or international customers.
EDC credit insurance protects your business if a customer does not pay because of insolvency, bankruptcy, or long delays. Some policies also cover certain political events.
Key features:
This is the most common choice for Canadian small and medium exporters selling goods or services on payment terms like net-30 or net-60.
Best for: Businesses wanting to improve cash flow and borrowing power.
Accounts receivable insurance is similar to credit insurance but focuses on your receivables as a group. The main goal is to make your balance sheet stronger, not just protect against one customer.
How it’s usually used:
Some Canadian banks require or prefer receivables insurance before they increase operating lines for exporters.
EDC offers this type of policy, and private insurers do as well.
Best for: Investments, contracts, or long-term projects in countries with higher risk.
Political risk insurance protects you from losses caused by government actions or instability, not by your customers.
Common risks covered:
This insurance is common for:
EDC political risk insurance is often used by mid-sized and large Canadian companies expanding into new and riskier markets.
| Feature | EDC Credit Insurance | Accounts Receivable Insurance | Political Risk Insurance |
|---|---|---|---|
| Main risk covered | Customer non-payment | Weak receivables and cash flow | Government or country actions |
| Typical users | Exporting SMEs | Growing exporters needing more financing | Investors and project-based exporters |
| Covers buyer default | ✅ | ✅ | ❌ |
| Covers political events | Sometimes | Sometimes | ✅ |
| Helps with bank financing | ✅ | ✅✅ | Sometimes |
If you want to see which export support programs fit your business and industry, GrantHub’s program database can help you compare options, especially when insurance costs affect your cash flow plans.
Insurance is not usually paid for by grants, but export grants can help with related costs such as market entry, travel, and international marketing.
A good example is CanExport SMEs, offered by the Trade Commissioner Service.
CanExport SMEs at a glance:
Many exporters use CanExport funding to enter a new market, then add EDC credit insurance after they start selling.
Standard credit insurance mainly covers if your customer does not pay. Risks from country events often need a separate political risk policy.
Insurance must be in place before you ship or invoice. You usually cannot insure past-due accounts.
Even small customers can cause cash flow problems if a few do not pay at the same time.
Some banks will not give you export financing unless your receivables are insured. Ask about this early to avoid problems.
Q: Is EDC credit insurance mandatory for Canadian exporters?
No. It’s optional, but many exporters use it to protect cash flow and improve financing terms from their bank.
Q: Can small businesses get political risk insurance?
Yes, but it is more common for larger contracts or investments. EDC looks at each project’s size, country, and risk.
Q: Does accounts receivable insurance replace credit insurance?
Not exactly. It is usually a type of credit insurance that covers your whole receivables portfolio, not just one buyer.
Q: Are insurance premiums covered by CanExport SMEs?
No, insurance premiums are not eligible. CanExport pays for market entry costs like travel, marketing, and research.
Q: Can I use EDC insurance and private insurance together?
Yes. Some exporters use both, especially if they work in many countries or industries.
GrantHub keeps an updated list of over 200 active grant and funding programs across Canada, making it easier to find support for your export and growth plans.
To choose the right insurance, start by thinking about where your biggest risk is: your customer, your cash flow, or the country itself. Many Canadian exporters use more than one type of insurance as they grow.
If you want to expand to new markets, it also helps to see what grants can cover your early costs. GrantHub is a resource to help you find export and growth programs that fit your business, so you can plan for both risk and funding.
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