Credit Insurance

In today’s environment companies face many challenges; from increased competition, lower margins, higher costs, recessionary economic conditions, unpredictable changes in government policies and management errors. This can mean bankruptcy for both domestic and international companies. Credit insurance provides cover for receivables in the event of a debtor being unable to pay. There are many other benefits to trade credit insurance other than simple ‘risk transfer’, and credit insurance is the only product available that provides a return on investment without ever having to make a claim. Any business selling on credit is suitable for a trade credit insurance policy and costs usually range between 0.1%-0.5% of insurable turnover.

Structures

For many companies a traditional ‘whole of turnover’ policy remains the best solution, however there are a range of options that can be considered to suit your specific requirements. These include simply insuring key accounts or key contracts, targeting cover on just your major buyers above a certain dollar threshold, replacing an existing bad debt reserve with an aggregate first loss policy or insuring a single account. Even within a whole of turnover policy there are a number of variable and specific endorsements which can be tailored to each individual case.

Prasidium understands different business sectors have their own specific requirements. We pride ourselves on our business pedigree and knowledge of the markets we operate in, and we work closely with you to develop solutions specific to your needs. We ensure all relevant and accurate information is obtained from you to achieve the best result for your business and we clearly explain all options and costs.

Types of cover
  • Whole of turnover – many variables
  • Specific accounts
  • Single buyer
  • Major debtor
  • Exclusion of ‘blue chip’ buyers
  • Catastrophe cover
  • Top up cover
  • Supplier default / advance payment protection
  • Export – including political risk (contract frustration, currency inconvertability, moratorium, public buyer default)

Key benefits

In the event of insolvency of non-payment of a customer, credit insurance provides you with swift access to replacement capital, protecting your cash flow, before permanent damage is done to your business.

A $100,000 loss on 10% profit margin is $1,000,000 in lost sales!

How would your business cope if one or two of your major customers fell over?

Give yourself piece of mind knowing all your hard work is protected and you cannot be affected from a bad debt by transferring the risk of non-payment to an insurer.

A trade credit insurance policy can provide you with support and confidence to extend larger credit limits, more favourable trading terms and alleviate buyer concentration risk issues. Gain a competitive advantage in the market because your competitors are!

Protect customer payments as you expand into new markets and be confident of dealing on open credit terms. Obtain greater access to information on your customers having an insurer assess your risk.

The normal channels of trade references and trading history bears less weight in assessing credit risk. In today’s environment its not uncommon for a long standing company to fall insolvent showing no signs of distress and paying within terms. A credit insurance policy will provide you with far greater access to information than you would otherwise be able to obtain, while at the same time providing you the tools to get paid faster from defaulting clients.

Most trade credit insurance policies have a clause that will cover costs associated with collecting an overdue debt – which can sometimes run into the thousands. Protect yourself against a preference claim which can occur up to 3 years from time of insolvency.

Credit insurance allows some credit management functions to be ‘outsourced’ and delivers greater efficiency. This through covering the hard costs of collection and legal fees when chasing an overdue debt and saving your credit team time by not having to check trade references or assess limited information from a credit report.

Is your sales volume creating working capital restraint?

Struggling with cashflow difficulties?

Trade credit insurance can support and strengthen access to credit facilities from financial institutions who can be named on the policy as a loss payee. A policy may help reduce financing costs.

Replace your bad debt provision with a trade credit insurance policy to improve the balance sheet and inject those funds back into the business as working capital. The trade credit insurance premium is tax deductible and you will receive a much larger reserve than you would otherwise carry. Funds are placed back into the business through a claim payment, rather than taking out unrecoverable money from a bad debt provision.

Why use Prasidium

It’s essential you get it right the first time.

We understand how important it is to get it right the first time, not only to save on cost’s but to have the right cover and processes in place so you get your claim paid. This means you will be only dealing with the Directors of the company with the expertise and knowledge to get you the right deal. As Directors we also provide assistance with ongoing management of the policy, personally getting involved in buyer reviews and the tough and uncomfortable negotiations with the insurers. Feel comfortable and confident you are only dealing with one senior executive managing all your needs.

Partnering with Prasidium will save you time and money. We will negotiate and obtain quotes from all the relevant A rated insurers in the market which allows us to benchmark premiums and negotiate the most cost effective cover for you. We represent your best interests to ensure you get the best possible price and cover. We have intricate knowledge of the credit insurance product and industry, and have close relationships with all insurers which provides strength in negotiations. It may be a local insurer is not the right fit for you and we have access to a wide range of International insurers as well. Let us do the ground work to achieve better results!

At Prasidium we think outside the square and challenge conventional trade credit insurance policies. We have 4 key risk categories we explore; your buyers and industry sector, your credit assessment process and terms of trade, your collection process including bad debts and finally your sales goals and relationship with credit. These form the basis of our risk management plan and crucially placing the right insurance programme for you.

We have a new approach to trade credit insurance with our 6 key values based around our business model of doing less of what doesn’t work: eliminating mistakes, reducing complexity and stripping away the inessential. Instead of being a jack of all trades, we are specialist trade credit insurance brokers and are focussed on being the leaders in our field. Our aim is to achieve outstanding results for our clients, with cheaper premiums, less work and simplifying the process which in turns reduces the chances for mistakes so you get your claims paid.

Our preferred insurers

© Copyright - Prasidium Credit Insurance ACN 60 267 8820, AFSL 511640