Well over 10,000 businesses go bankrupt in Belgium every year. The main cause is the late payment or non-payment of bills. A great many companies depend upon 20% of their customers for 80% of their turnover. When an important customer goes out of business this creates a huge risk for the survival of your company.
Credit insurance basics
Your credit insurance protects you against customers who are unable to pay. The protection can begin as early as the manufacturing period applicable to an incoming order for customisation.
It applies in the case of the debts of your professional customers, except for public authorities, private individuals or related companies. Credit insurance covers unquestionable insolvency (such as bankruptcy) and presumed insolvency (non-payment by an operating company). Also covered are political risks: the risk of non-payment in the case of force majeure, such as a currency shortage, war or a natural disaster.
Credit insurance: one of the components of a sound financial policy
Credit insurance enables you to structure, support and professionalize your credit control policy:
- Risk prevention – You investigate the creditworthiness of your customer or prospect, and define a credit limit, so as to prevent large outstanding balances accumulating.
- Risk detection – Your credit insurer keeps a close watch on the financial position and payment behaviour of your customers and sounds the alarm if necessary.
- More professional debt collection policy– Your credit insurer takes over your debt collection policy if need be.
- Compensation in the event of insolvency– In a situation when your customer is unable to pay your insurer steps in.
Credit insurance as a smart tool for doing business
Credit insurance first of all offers protection, while providing you with a business opportunity. You can become more efficient at prospecting and be more prepared to allow payment extensions for reliable customers. You also save on debt collection costs and minimise your company's business risks.
