What is credit insurance?
Trade credit insurance is designed to protect your business against financial risks that are beyond your control. But how does it work?
Simply speaking, credit insurance protects your business against the failure of a client to pay trade credit debts that they owe you. Such debts arise where a client becomes insolvent or does not pay within agreed terms and conditions or timescales.
Rather than simply paying out in the event that this situation arises, credit insurance helps to mitigate the risk of such a scenario happening in the first place. Bollington works in partnership with Euler Hermes, the world’s largest provider of credit insurance solutions, to facilitate this.
If you supply Bollington with a list of your major clients and trading partners, we will run an initial risk assessment of the creditworthiness, financial performance and well-being of their business, in consultation with Euler Hermes. Each client is then awarded a grade reflective of their activity and their way of conducting business. In turn, this provides you with a specific credit limit up to which your business (as the insured party) can trade and be able to claim should something go wrong. This is continually assessed through risk monitoring throughout the lifetime of your credit insurance policy, and can be revised either up or down dependent on the ongoing trading status of your ‘buyer’.
You gain the peace of mind that anybody trading with you is likely to remain financially solvent, as we will also inform you should there by any changes that may affect the financial health of your clients, and therefore their ability to pay you for goods or services that you have supplied. Should they not be in a position to pay, you are insured and indemnified up to the limit specified on your policy, and we can also manage any debt collection required should there be a need to do so.
Why take out a credit insurance policy?
With almost 15,000 company insolvencies in 2015 (according to official statistics from the Insolvency Service), the risk of a company you deal with encountering financial difficulties is ever-present. Particularly where your business has a number of larger clients purchasing products or services from you, it only takes one or two of these clients to fall into difficulties and your business could be severely impacted, too.
Non-payments might damage your company’s profitability and its ability to make further investment. With credit insurance, you gain assistance in spotting financial issues that may occur with those who trade with you, while also mitigating your losses where payment is not forthcoming.
By taking out credit insurance through Bollington, you gain:
- Wide ranging protection against insolvency risk
- Improved relationships with clients
- More confidence in pursuing commercial business opportunities
- Enhanced relationships with banks and financial providers
Bollington is pleased to be able to offer trade credit insurance to companies of all sizes, with pricing designed to reflect this. So whether your business is an SME or a large multinational company, Bollington can provide insurance that meets your need.
It’s easy to take this forward. Fill out our simple form on this page with details of your top customers, and we will check your customers for you, free of charge. Alternatively, call us on 0161 929 1851 to discuss how our credit insurance offering could save you a great deal of time, effort and financial inconvenience in the long-run, with practical examples of how credit insurance has helped businesses like yours over the years.