Back to Basics: What if my Largest Customer Doesn’t Pay?

Sales Concentrations and Large Customer Payment Risk

Take a second and think of the name of your largest customer. Now, think about how much that customer owes you. Do you have the figure in mind? Next, imagine that your next call or email tells you that this customer can’t or won’t be paying you. Let that sink in for a minute.  What thought runs through your mind? If you’re like most people, it’s probably “Oh Nooooooooo….” or something worse.

At a certain dollar amount, an unpaid customer balance changes from an irritation to a potentially devastating event as the cash flow gap stretches your business to the breaking point. Continue reading

5 Reasons a Customer May Not Pay

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

Protect Your Client’s Largest Asset

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

Loaning on Foreign Accounts? 6 Ways Credit Insurance Makes It Work

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!”.

Continue reading

3 Ways a Credit Insurance Policy Adds Value

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

Lenders: Managing Loans Backed with Credit Insurance

American_CashAfter 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