Credit Insurance - Protect your business against non payment of invoices

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There were an estimated 4.5 million business enterprises in the UK at the start of 2006, of these: 99.3% were small 0.6% were medium-sized and 0.1 per cent were large source - BERR

Credit Insurance - don't let the dominoe effect of bad debts bring YOUR company down

Credit vetting your customers is a process of examination and evaluation, which often leads to performing a background check on potential customers before giving them credit terms.

A financial report from an information provider is often a good start but that cannot give you money back in the event of a customer not paying outstanding invoices.

What happens if a customer doesn't pay when due date arrives?

What happens if they call in the Administrators BEFORE they pay your invoices?

The answer is you will probably have to write that bad debt off and attempt to recover lost monies elsewhere - if you can still manage to trade after such a hit to your cashflow !!!

This is where Trade Credit Insurance is different. Your Credit Insurance Policy gives you comfort and peace of mind in knowing it will pay you if your customers don't.

Credit Insurance will give you information on a potential customer BEFORE you decide to trade with them AND monitor them across the year.

So, how does Credit Insurance work? How much Does it cost? And do you really need it?

Credit Insurance / Bad Debt Protection / Invoice Protection can protect a company against bad debts and non payment of invoices due to Insolvency and/or Protected Default.

A typical Credit Insurance Policy requires you have a credit limit on each of your customers/buyers.
A credit limit can be applied for with the insurer or set by yourself , up to a pre-determined level set within the policy (Discretionary LImit).

The credit limit amount should be enough to cover the highest outstanding amount in any one time, taking into account the terms of payment you have granted your customer.

If a customer has not paid outstanding invoices after a pre-agreed time AFTER due date (usually 45 - 60 days), the account MUST be reported to the insurer.

A typical claim arises when, under Protracted Default, the buyer has still not paid after a pre-determined time (typically 6 months after due date).

In the event of a customer becoming Insolvent / in administration before they pay outstanding invoices, the Insurer often settles the claim within 30 days of confirmation from the Insolvency Practitioner that the debt does exist in the books of the failed company.

A claim will only be paid if all credit limit and reporting criteria have been met and no policy premiums are outstanding.

* The above is a guide only of a typical wholeturnover credit insurance policy and should not be used to replace or determine your own credit insurance policy's terms & conditions.

How Much Does It Cost?

As no two businesses are the same, it is not possible to precisely predict the cost of a credit insurance policy.

Many factors determine the premium rate, such as:

Turnover
Your trade sector
Your customers
Previous bad debt history
Credit control procedures

On average, the premium rate will be a fraction of 1% of your insurable turnover.

Do You Need Credit Insurance ?

Do you want to protect your turnover and ultimately, your business?
Are you worried about your customers failing to pay invoices?
Have you suffered from a bad debt before and want to protect against this now?

If you answer yes to any of the above, then Credit Insurance will help you and your business. So contact us now before it's too late.

Have a look at the benefits of having SME PROTECT help arrange and manage your Credit Insurance Policy.

Still want to know more about Credit Insurance? Click Here for Frequently Asked Questions about Credit Insurance.

Or complete a short Credit Risk Questionnaire and we will contact you if we require further information.

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