Most businesses make a provision for bad debts, but any unforeseen insolvencies could seriously dent reserves and the loss of a major customer could seriously impact your company.
The main benefits of credit insurance are:
- It can be used as security for finance from Banks & Invoice Finance providers.
- It allows you to assess and monitor your ledger to ensure customers remain creditworthy. Most insured companies see a marked improvement in the credit worthiness of their ledger.
- It allows you to identify and target good quality new business prospects with the confidence that you will get paid for your goods or services.
- It allows you to develop new export relationships in unknown territories. This may be especially important to you post-Brexit.
Frequently asked questions
Have a query? Take a look at our FAQ’s below. If we’ve not covered your query please give us a call on 0203 037 8397 to speak to a member of our Trade Credit team.
How much does credit insurance cost?
The cost is variable dependant on your business sector, annual turnover and previous bad debt record as well as the type of policy you need. Please speak to us to arrange a quotation. Premiums vary from insurer to insurer and our Trade Credit Brokers will search the market to identify the best solution for your business.
Is credit insurance suitable for SME's?
Yes, many SME’s use Credit Insurance to secure their growth. We have several SME options for businesses with turnover under £500,000 with minimum premiums starting at about £2500-£3000.
Is it only suitable for small businesses?
No. Many multinational and large UK based companies use Trade Credit policies to mitigate risk as part of their corporate governance and to protect their owners or shareholders.
Do I have to insure all my customers?
No, but it is often the most economical option. You can insure a single or group of customers, but the percentage cost can increase the more selective you are.
Can I buy cover for a single customer?
Yes, but the Insurer acceptance rules are often tougher than for a whole ledger option and premiums are relatively higher.
Can Insurers cancel cover on a customer?
Most policies give the Insurer the ability to re-assess the buyer limit and if the situation deteriorates they could reduce or cancel the limit for future deliveries. Any deliveries already made would always be covered in full and most current policies provide a 30 day grace period to allow you to trade out.
Why should I insure my customers?
Customer relationships are key to your business but do you know everything that is happening to your customer? They may have issues with their own Customers or Suppliers which could impact on your debt and by the time you find out it can often be too late. Credit Insurance can be your costed bad debt reserve covering any failure however large or unexpected.
Tysers have specialist knowledge in Trade Credit Insurance and can help and guide you through the implementation of a policy as well as helping the policy blend with your existing Credit Management procedures.
of most businesses’ assets are their debtors. Companies would not dream of not insuring their other assets – so why not insure the risk exposure your debtors present?
All of the Credit Insurers we use are ‘Investment Grade’ so are at least Standard and Poor’d A- or equivalent. This may be important to your bank or funder if they are looking to the policy as security.
£100,000 bad debt for a company with a 10% net margin requires £1 million additional sales just to cover the shortfall.