What is trade credit insurance?Credit insurance is a product designed to protect what is most likely your largest asset (most companies have more than 40% assets in their debtors book). It covers losses caused by insolvency, persistent default and business rescue.
Does it cost more to use a broker?No. Whether you go direct and try and figure out the best policy yourself or go through a specialised broker the costs are the same. The value the broker provides is with the evaluation of your needs, the quotation and the implementation of the policy. We structure the policy to the needs of the policy holder not the insurers. We also offer ongoing support in training, claims processing and monthly monitoring of overdues.
Do I have to cover all my debtors?Not in all cases. Whether you need to insure all your debtors depends in the size of your company, the number of debtors you deal with the size of these debtors. So there are options and we are here to advise accordingly.
What will credit insurance do for my business?Credit insurance assists companies in several ways. It protects against the infrequent, but highly severe, catastrophic credit loss. It can enhance a company’s financing relationship; it may increase your borrowing base. Most importantly it allows companies to expand its sales as well as profits to existing and new clients.
What does it cost?As you can imagine there are a number of factors that go into calculating the cost. These include:
- Looking at the business
- Turnover history
- Distribution of turnover.
- Age analysis (trading terms)
- Bad debt history
- Quality of customers
- Outstanding balances
- Payment period
How long does the process take?We will first complete a needs analysis on the company and decide what structured policy is best suited to your business. Then a proposal form will be completed and forwarded to the relevant insurers. The turnaround time is approximately 5-10 working days depending on the structure of policy and size of your business.
I only have 10 debtors can I have a policy?Yes; there are policies tailored for businesses with a small number of debtors.
I haven’t experienced any bad debts, what else does credit insurance offer?
- The policy offers you the safety to expand sales to existing and new clients.
- It may secure better borrowings
- Reduces bad debt reserve
- Increases access to credit information on potential clients
My turnover (sales on credit) is only R2 million per annum. Can I get credit insurance?Yes there are policies tailored for businesses with this size turnover. We will create a policy that services your needs allowing you to safely grow your business
I get LCs for my export debtors, why should I insure?LCs are costly, and if not met result in a lengthy claims process.
How long does it take for a claim to be paid?This varies from insurers and on the specifics of the claim but the guidelines are, once a claim form is completed and submitted:
- Liquidation straight away
- Persistent default 5-6 months after term date
- Business rescue, 3 months after date of notification of business due.