Thousands of companies worldwide guarantee their financial profit through Trade Credit Insurance.
Trade Credit Insurance is a protection against default on credit sales. This type of insurance indemnifies the insured company (the creditor) for nonreceipt of credits granted to its clients (debtors). It can be contracted for credit sales in the domestic market and for financed export operations.
In the current market, your company needs to extend credit to customers, in order to remain competitive. Credit insurance protects the cash flow of your business against the risk of default or late payment of domestic and export credit sales of products and services.
Every credit transaction, guaranteed by insurance, has the participation of:
- Insurer: Responsible for indemnifying the insured for part of the loss arising from customer default.
- Debtor: The natural person or legal entity obliged to repay a credit granted in accordance with the terms of a commercial transaction made with the insured.
- Insured: The natural person or legal entity that purchases the insurance for its own benefit or for the benefit of whoever finances the credit transaction.
Additional benefits:
The provision for bad debt losses can be reduced;
Improves your management of credit risks, and moreover it is a good corporate governance practice;
Enables your company to make credit sales without adding excessive risk to your balance sheet;
Export trade credit and domestic trade credit insurance can open up new markets to your company;
Trade Credit insurance can help you to finance your business;
The protection afforded by trade credit insurance can be used as collateral to back a financing program with reduced rates;
Trade Credit insurers have databases with up-to-date information on companies, as well as economic information on those countries that purchase their products and/or services;
The insurers are capable of calculating and recommending the ideal credit limit for each buyer, and providing advice on collection services;
The insurers evaluate the risk based on their analysis of the company’s credit information, financial data, and payment timeliness in the market where the company operates. It is the insurer that sustains the loss if its credit recommendation is incorrect.
CredRisk is at your entire disposal to guide you and help you find the best Trade Credit Insurance solution for your company.
How it operates:
Policy
The policy covers the invoices generated during the course of a year. To activate the cover, it will be necessary to determine credit limits for your customers.
Communication
Your company reports any overdue payments to the insurer. The premium may be charged on the approved credit limits or be based on a percentage of the sales.
Losses
Claims are paid on the basis of 85% to 90% of the losses, within a 30-day period in the case of insolvency. Periods are longer for losses arising from protracted default and political risks.
Solution
CredRisk Seguros, as an independent insurance broker, helps your company in evaluating the best option to minimize your organization’s credit risk, whilst observing your risk and insurance management policy. This having been said, our team is able to furnish innovative solutions that best meet the needs of your company.
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