Trade credit insurance is a tool for business growth. Through expert credit analysis, the insurance allows you to select the best opportunities to extend credit to new and existing customers, industry sectors and geographical areas, all while ensuring that if a customer fails to pay, you will be indemnified for the loss.
Allianz Trade research shows that 76% of companies whose customers become insolvent get nothing by way of reclamations, illustrating the value in holding a Trade Credit Insurance Policy.
Many businesses provide goods or services on credit terms to facilitate trade. However, credit terms present a risk to your business: if a customer defaults, invoices may go unpaid. Non-payments can be devastating to the balance sheet. Trade credit insurance provides businesses with protection against the risk of debtor default due to insolvency or non-payment, and the confidence and security to trade on credit terms. It offers vital reassurance that should your customers fail to pay their debts, you will be indemnified.
As a specialist independent trade credit insurance broker, FinCred are here to help ensure you get the best value from your credit insurance policy.
So, what are the top four reasons for claims rejections?
- Late reporting
Failure to report a non-payment or adverse information within the timeframe specified in your policy. - Lack of cover
You must have a valid credit limit in place on the correct legal entity for a debt to be insured. Ensure that you request cover on new customers and track reductions or cancellations to cover. Ensure you monitor your level of cover versus level of trade, your credit limit must be high enough to cover your outstandings. Be aware of the conditions that will cause cover to cease. - Fraud
Know your customer. Fraud is on the rise, with a common scam becoming customer impersonation. A fake customer will impersonate a reputable company to trade with you, with the scam usually discovered when the fake company fails to pay you. It is an illegal act and only legitimate companies can be covered. Find out our top tips to avoid fraud and mitigate risk with an Allianz Trade Fraud policy. - Lack of documents
Keep a record of all supporting documents to prove that goods and services were ordered and supplied. You will be required to produce this paperwork in the event of a loss or a claim.
If you need help or advice regarding your credit insurance policy, contact FinCred today.
