Credit Insurance
Credit insurance is at the core of all trade risk management solution
offered primarily by well established mono-line companies some of which have
been in this business for over 100 years. Almost all other risk transfer
solutions are a derivative of this credit insurance offering or are another
way of achieving a benefit that can be derived from credit insurance.
Credit insurance covers commercial risk - both domestic and export. It
protects what is often your company's largest asset - the accounts
receivables. You are protected against your credit customer's insolvency
(bankruptcy/receivership), protracted default (slow pay) and non-acceptance
(refusal to take goods).
The benefits of credit insurance go well beyond the obvious protection
against bad debt losses. Many of these benefits can be quantified
highlighting how the incremental premium spend can be offset significantly
by the many benefits of credit insurance. Some of these benefits include:
CAPS bad-debt losses that even the best credit management practices
cannot foresee
PROTECT against catastrophic loss of commercial risks (political risks can be added)
PROTECT cash flow and more accurately project financials and cash flow
EXPAND sales safely to new customers and new markets both domestically and abroad
COMPETE more effectively using lower cost and more flexible open account terms
SECURE better financing terms with lenders securing the funding to grow often with a better rate and security package
ENHANCE and support credit management with the knowledge, expertise and worldwide presence of a credit insurance partner
REDUCE bad-debt reserves and deduct premium for tax purposes
With the world becoming more and more complex, failures are coming from
increasingly unpredictable sources such as management deficiencies, global
competition or loss of markets, fraud, complex financial restructuring,
regulatory changes, changing technology, legal maneuvering (Chapter 11),
product liability, political upheaval, global economic changes and more.
Credit insurance or one of the other derivative solutions can prepare you
for this more volatile world.