What is Credit Insurance?
Credit Insurance
What is Credit Insurance?
In its most simple form it is the insurance of your debtors or accounts receivable. It can be provided for both domestic sales and international exports.
What percentage of your current assets is in your receivables? Companies routinely insure their tangible assets such as property and stock but often overlook getting coverage for this equally important part of their current assets.
Advantages of credit insurance
Increase your sales Credit insurance allows you to grow your business without worry. Whether you are trying to expand credit lines with existing customers, or extend competitive open credit terms to new accounts, using credit insurance to reduce or eliminate the risk is a great way to safely grow your business.
Improve your borrowing and cost of finance Having a credit insurance policy in place can assist when negotiating with banks on borrowing and its related costs.
It helps with your credit decision & information on your customers When you implement a credit insurance program you are not just buying coverage on your receivables, you are getting a partner in credit risk management whose goal is to help you avoid credit losses before they happen and back you up when they do.
Allows companies to lower their bad debt reserve By reducing the bad debt reserve on this scale, you will be able to take excess bad debt reserves back into income (by provisioning significantly less) thus improving earnings, shareholder equity and financial ratios
Protect your balance sheet A number of companies derive 80% of their business from 20% of their clients. No matter how unlikely the possibility can these companies afford any of the clients from that 20% to default?
In a nutshell, this is an essential tool for profitable growth and operations for any company.
A quote for Credit Insurance commits you to nothing and highlights, in more detail, the many benefits to be derived from a policy. See how your company can benefit from the security and information afforded by a Credit Insurance policy, as well as access to sophisticated debt collection and legal recovery services.