Credit Insurance is a credit risk management product that insures commercial accounts receivable against nonpayment. In other words, even if your customer defaults on payment or goes bankrupt, you will still be paid for the merchandise shipped or services rendered to your customer. By assuring payment, your company’s stability and growth will be greatly supported.
Benefits of Credit Insurance:
- Protects against excessive of catastrophic losses.
- Provides a safety net to new markets, whether domestic or overseas.
- Allows you to pursue new customers more freely and provides higher lines of credit to existing ones.
- Assists in establishing a guide for effective credit risk management.
- Covers orders while in process but not yet shipped.
- Greatly enhances your borrowing power with banks and factoring companies.
- Strengthens compliance for Sarbanes-Oxley.
How do you know if your company needs Credit Insurance:
- Your company has experienced the impact from a significant customer bankruptcy or payment default.
- Your company would be adversely affected by the non-performance of your largest customers.
- Your sales department continues to sell to customers over credit department objections.
- Your company is falling behind the competition because you refuse to offer more lenient credit terms.
- Your company hesitates to sell in foreign markets because of the fear of not being paid.
- Your good customer has insisted on purchasing from your company on credit but you just keep hesitating.
- At least 20% or less of your clients account for 80% or more of your accounts receivable portfolio.
- Your company’s bank currently excludes foreign receivables and this is restricting your borrowing power.
If any of the above situations describes your company, you most likely need Credit Insurance.
Stellar Risk Management Services, Inc. is an independent agent for several credit insurance carriers. Please contact us through our online inquiry form or by phone. We will be pleased to discuss this very useful credit risk management tool with you.