Why Do Companies Buy Credit Risk Insurance?

Risk Mitigation

• Protects against the risk of a customer on credit term sales up to 365 days

• Mitigates concentration risk when a large portion of a company’s sales are directed to one or a few customers

• Provides valuable credit information on unknown buyers

Financing and Securing

• Facilitates attractive bank financing

• Allows access to additional capital by margining your Accounts Receivable and Inventory

• Supports Letters of Credit (L/C’s) on applicable transactions with additional security

• Provides enhanced security when Factoring Accounts receivable

Credit Enhancement

• Supports a company’s accounts receivable management and validates credit protocols

• Provides an insured credit limit for a customer and monitors portfolio performance during the policy period

• Access to readily available domestic and international credit reporting information

Increase Sales

• Increase sales to new and existing customers.

• Increases export sales by establishing new foreign markets

• Provides a competitive advantage by having the ability to offer extended terms

Corporate Governance

• The cost of Insurance, in most cases, reduces your bad debt reserve for Both Private and Public companies.

• Offers assistance to directors and officers by providing a second opinion on customer credit limit decisions and monitoring the customer portfolio

• Demonstrates prudent Credit practices for “would-be” investors

Regardless of your reason for using credit insurance, it provides the necessary coverage for all stakeholders and shareholders to maintain a stable business environment. With that being said, this product is sometimes referred to as “Sleep Insurance,” as you can rest assured that you have secured, sometimes, your most significant asset.