Over the last year, a lot of businesses aren’t getting paid by their customers! Credit insurance claims are up significantly. Commercial bankruptcy is up 26% from 2015 to 2016. Payment patterns are slowing in many countries. High levels of consumer debt are causing sales reductions in several key industries like the auto industry.
While every case of non-payment is unique to the situation, there are five common reasons customers may not pay what they owe. Continue reading
Are you helping your clients protect their largest asset? Are you looking for ways to add value to your client relationships? To be a trusted adviser who points out unforeseen risks in their business? Would it be helpful to differentiate yourself from competition?
If the answer to any of these questions is “yes”, read on. Continue reading
You found a new C&I loan prospect and have an opportunity to grow your portfolio and help a new client at the same time. Then you realize the prospect has a sizable percentage of sales to foreign customers. That means foreign accounts receivable! To give them the amount of financing required, you know you’ll need to loan on the foreign accounts. You get that sinking feeling and begin to realize that maybe this deal won’t happen after all. Oh well, you can always keep prospecting and maybe help the next one?
In the words of ESPN Gameday’s Lee Corso, “Not so fast my friend!”.
Each company’s decision to use credit insurance is based on their specific needs. There are however, three universal ways a policy adds value to everyone’s largest asset: their client portfolio.
Prevention of Bad Debts
An often overlooked value of credit insurance is its ability to prevent a payment problem before it happens. How does it do this? Continue reading
After giving a presentation to the lending team at a bank recently, I was asked “What do we need to watch out for when using credit insurance on a loan?” Great question!
In my last post, I described how a business can use credit insurance to access more financing. As lenders rely on a policy to advance more money and provide borrowers with more financing, there are four steps to remember to safely manage a loan backed by credit insurance.
Always be the beneficiary
Like all other insurance policies, trade credit insurance policies can be assigned. When loaning money, the lender should always be the policy beneficiary, which means that they essentially co-own the policy. This gives them rights that extend beyond simply being the loss-payee. Specifically: Continue reading
A business investor called today to discuss a company he owned. “The company is growing, with new contracts coming from mostly outside the US”, he said. “The problem is that we don’t have enough working capital to support the growth and our lender isn’t giving us full availability on our line of credit either.” We went on to discuss the issues and potential solutions that trade credit insurance could provide.
Over half of my clients found me because of this same situation – the problem of accessing enough working capital through their line of credit. Fortunately, trade credit insurance offers a cost-effective way to access more financing.
One of the biggest benefits of credit insurance is its ability to increase access to working capital. When a business insures its receivables, the credit insurance policy becomes an additional measure of security on the lender’s collateral and on the cash flow of the business. The result is that lenders can offer more financing for their borrower. Continue reading