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Taking out a credit insurance 

Do you supply or deliver on credit and have you ever had to deal with non-payment? Non-payment can occur when a debtor is not able to pay for the outstanding invoices. A collection agency will attempt to claim the outstanding invoices. However, in case of insolvency like bankruptcy or moratorium, the collection agency will not be able to claim the outstanding invoices anymore. This means that you have supplied or delivered a product or a services while payment is held of. That is, you have to pay the expenses but do not make the turn-over. Therefore, the working capital will be compromised. A credit insurance offers protection against this kind of non-payment.

You can take out a credit insurance in two ways. You can either choose to take out a credit insurance directly at one of the credit insurance providers, or with the intermediaries who help mediate towards a credit insurance. On this page, we will explain what a credit insurance is, what the benefits are and how you can best take out a credit insurance.

What does a credit insurance hold?

A credit insurance is an insurance that is designed for companies who deliver goods and services on debit account. The insurance offers protection against non-payment of debtors who are not able to make payment of outstanding invoices due to bankruptcy or moratorium. The credit insurance offers coverage and makes sure working capital and financial continuity are not compromised. Especially in an industry with a low profit margin and many risk factors, a credit insurance is recommended. 

Next to damage-payment due to non-payment, a credit insurance offers two more important aspects. One of those aspects is a collection agency that will operate free from charge. The collection system can be included into the policy. The collection systemmakes sure that outstanding invoices are usually paid faster, and that, when non-payment occurs, outstanding invoices are yet claimed.

The second aspect is the creditworthiness check and the up-to-date information a credit insurance provider offers. Some credit insurers have been active for over 100 years and have build an immense database with relevant and up-to-date information regarding sectors, markets and companies. When you take out a credit insurance, you will hae access to this up-to-date information. Moreover, the credit insurer will perform a creditworthiness check with which the creditworthiness of your current and debtors will be checked. Potential losses due to outstanding invoices can be averted.

Benefits of a credit insurance 

A credit insurance offers next to protection against non-payment multiple other benefits for your company. A credit insurance offers; 

  • Increase of the financial options; by limiting the risks, banks and investors will extend credit faster
  • Increased competitive advantage; with the up-to-date information and the creditworthiness check, you can gain competitive advantage by making the payment policy more flexible.
  • Outstanding invoices are paid faster; because of the collection system, outstanding invoices are generally paid faster
  • Keep an eye on;  you, as well as the credit insurer, can keep a close eye on the credit management when you have the right design in a credit insurance. The credit management portfolio can be appraised as well as possible to prevent damage-claims due to non-payment.

These are only some of the advantages a credit insurance can offer you. Do you want to read more about the advantages of e credit insurance?

The costs of a credit insurance

The premium level of a credit insurance is determined by several factors. The costs of a credit insurance are generally between 0.075% and 0.35% of the turn-over per year. The exact costs will be determined by;

  • The turn-over
  • The industry
  • The number of countries and debtors
  • The average debtor losses
  • The payment policy

Do you want to know more about the costs of a credit insurance? Request easily and quickly a quotation and learn more about the premium level for your organization within 24 hours.

Is taking out a credit insurance advisable?

In an industry with low profit margins, many risk factors and/or export, taking out a credit insurance is always recommended. What does it mean for your organization when a big debtor goes bankrupt or is not able to pay outstanding invoices due to moratorium? With a small profit margin, you will have to make a lot of revenue to earn back the losses. In cases like this, the costs of a credit insurance are only a fraction of the losses.

How to take out a credit insurance?

Taking out a credit insurance can be done directly at one of the credit insurers of through the intermediary. Taking out the insurances through a intermediary is often more profitable as they are able to compare offers of all credit insurers. Moreover, the credit insurance providers are aware of the fact that multiple providers bid along when an intermediary submits a quotation. As a consequence, providers will offer competitive quotations to expand their customer base.

Do you want to know more?

Would you like more information regarding the costs of a credit insurance, the advantages, or what a credit insurance could do for your organization? Contact us free from any obligations. In a personal consultation, completely free of charge, we will discuss the possibilities with you and offer you advice on the aspects of a credit insurance.

Can we help you?

Our specialists are happy to take the time for your questions.

Send an email

info@thecreditinsurers.com

+31 85 301 2230

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Contact without obligation Anton Dijk

Account manager

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