A debtor insuranceIndispensable within the debtor management

Do you want to know what a debtor insurance is?

Debtor insurance

Proper debtor management is essential to be able to grow as an organization. Proper debtor management ensures your grip on things, and that you are able to detect risks and opportunities in an early stage. Default of debtors is one of the biggest entrepreneurial risks. Although this can be decreased by well shaping the debtor management, the possibility remains outstanding invoices can not be paid due to insolvency.

The professional shaping of the debtor management is of great essence to prevent financial surprises. Research shows that default of debtors is one of the most common causes of bankruptcy of an organization. Proper debtor management and a debtor insurance ensure that the continuity of your organization will not be compromised.

What is a debtor insurance?

A debtor insurance is an important part within the debtor management and can also be called credit insurance. A debtor insurance offers coverage against the risk that a debtor will not be able to pay for the delivered goods and services due to insolvency.
A debtor insurance is designed for all companies that supply and deliver products and services on credit. When a debtor is not able to pay the outstanding invoices due to insolvency, the credit insurer will yet attempt to claim the payment. The credit insurer will pay for the outstanding invoices to you, conform the policy. The cashflow remains optimized and the continuity of your organization will not be compromised.

Costs of a debtor insurance?

The costs for the debtor insurance depend on the height of the premium of the insurance. The height of the premium depend on the kind of debtor insurance you choose, and several other factors. The most important factors are;

• The turnover
• The industry
• The payment terms and delivery time
• Average debtor losses
• Potential additional risks

Why take out a debtor insurance?

The most important reason to take out a debtor insurance is the payment of default of your debtors due to insolvency. However, a debtor insurance has two more advantages. These aspects can be incorporated into the policy.
A creditworthiness check is one of these two aspects. The credit worthiness check is a check that will be performed by the provider of the debtor insurance. The creditworthiness check offers up-to-date information on the creditworthiness of your current and new debtors. With this up-to-date information, potential risks can be detected in an early stage. Moreover, a competitive advantage can be achieved, as your organization can make the payment terms more flexible because of the up-to-date information.
The second aspect is the debt collection system. When taking out a debtor insurance, the collection system can be incorporated in the policy. With the professional shaping of the collection, outstanding invoices will generally be paid faster. This improves the cashflow, whereby the organization is able to achieve a competitive advantage due to the increase in working capital.

Is a debtor insurance suitable for you?

Would you like to know whether a debtor insurance is suitable for your organization? In a free personal consultation, we would like to tell you what a debtor insurance can do for your organization and what the possibilities are. Contact us now without any obligations.