A Credit Insurance policy will provide your business with vital protection against non-payment for either goods or services due to the failure of a customer to pay their bills. A claim arises when a customer becomes insolvent or fails to pay within an agreed period of time. A policy can cover straightforward goods sold and delivered and also other commercial risks such as work in progress.
For exporters there are other risks to be considered such as problems in being paid in “hard currency” or other political events such as war or revolution. A well-constructed export policy will cover both commercial and political risks. In the event of a loss the insured percentage is normally 90% for commercial risks and 95% for political risks.
Can you imagine just how difficult, time consuming, expensive and complicated it would be to try and recover an uninsured debt in just about any overseas market. Where would you even begin? It is certainly difficult enough for UK debtors when we are familiar with the legal system and culture. After an agreed period the insurer will take over the collection of an insured debt and they will normally cover the costs of any recovery action. If they can not then collect they will pay a claim under the default heading.
What Can Credit Insurance do for Your Business?
Credit Insurance will help to minimise bad debts and allow your company to expand sales safe in the knowledge that you will definitely be paid. If you think in terms of a credit manager who never makes a wrong decision to trade with a customer you will have a good idea of just how Credit Insurance could benefit your company. By identifying exactly which of your current and potential customers are sound credit risks you can concentrate your sales effort on customers who offer the best prospects for growth and profitability.
The Insurance Company will advise on major credit limit decisions whilst usually leaving you to insure your remaining customers by following an agreed set of in house procedures. Examples of this would be using your customers’ payment record and also reports from recognised credit status companies such as the Experian & D&B.
Your Largest Asset?
For most companies over 40% of current assets are made up of money owed for goods and services provided on credit terms. Most companies insure all their other assets from buildings and stock to key personnel. However if the largest single asset is uninsured then a disastrous loss could be just around the corner. Statistically you are much more likely to incur a large bad debt than to see your office or factory burn down.
All My Customers are ‘Blue Chip’
Most companies think their major customers present an undoubted credit risk. Virtually every insolvent company was someone’s solid gold customer but often the owners are either too close or can not see the risks they are taking. There is a long list of very high profile failures and near misses over the last few years from long established banks to large quoted companies.
Find Out More
If you would like to find out how Credit Insurance could benefit your company please do not hesitate to contact us either by Email or telephone. All of our quotations are provided on a strictly no cost or obligation basis.