March 29, 2020

Why take out business credit insurance?

Faced with the risk of non-payment, insurers have set up a form of insurance that protects you against the risk of non-payment of your trade receivables up to the guaranteed portion.

 

What is business credit insurance?

What is business credit insurance?

Credit insurance is an insurance that protects the company against the risk of non-payment of goods ordered / delivered and services provided, by informing it of the solvency of its customers and allowing it to be covered and indemnified in the event of non-payment of trade receivables, on the domestic market (domestic credit insurance) as well as for export (export credit insurance).

The main characteristics of a business credit insurance contract:

  • In a global policy, the credit insurer can cover certain customers and refuse others.
  • The company must make a request for coverage with a specific amount to the insurer for so-called “named” customers. The insurer then proceeds to a prior examination of the file, makes an arbitration relating to the amount of cover you have requested, issues a partial or full agreement and thus sets a limit.
  • Within this limit, the insurer pays a percentage of compensation called “guaranteed quota” or “compensation quota”, generally around 90%.

 

The services offered by the credit insurance contract for business

Prevention of default risk: upstream, the credit insurer plays an important role in risk prevention. From the information he collects and analyzes, he brings to the policyholder his expertise in identifying and assessing the risk of default by prospects or customers. Thus, when the insured company requests from the credit insurer guarantees for excessively risky claims, the latter may refuse or accept them only partially. The insured will then be free to grant payment terms to his client or not, but will have been alerted to the risk involved.

Collection of unpaid debts: in the event of unpaid debts, whether the claim is insured or not, the credit insurer provides its insured with an amicable and efficient collection service. His early intervention may allow the insured to recover his debt and thus preserve his cash.

Compensation for uncollected claims: if recovery has failed or only partially recovered the insured claim, the insured receives compensation. However, the quota, the amount of which varies according to the contracts, remains at his expense.

 

How Credit Insurance for Business Works

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The purpose of this approach is to put all the covers on your client portfolio.

  • After receipt of the request and depending on the amounts, the arbitration department of your credit insurer makes a decision on your request for outstandings either automatic and immediate or manual by an arbitrator based on a specific study.
  • The amount of cover once placed “endures” over time, your company is covered with your client.
  • This amount of cover commits the insurer, it will serve as a reference in the event of a claim.

Once the contract is in place, you will receive your confidential Online access codes from the company within 24 hours. The first step will be to question the arbitration service via Online access on your customers (with the siren number, VAT, VAT) in relation to the desired amount of cover. You can at any time cancel, query or modify coverages at your convenience. You can now benefit from permanent monitoring of the financial and economic situation of your customers and prospects. With this payment default prevention service, the insured is alerted in real time of the risk incurred when he deals with a new prospect or when he grants his customers payment terms.

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