The new alternative to credit insurance that could be right for you
While many of our articles focus on companies not using credit insurance, today I’d like to speak to the companies that are currently insuring their receivables. Whether it be Allianz (formally Euler Hermes), Coface, Atradius, it’s good to know they are utilizing this safety mechanism to protect them from taking losses on their A/R. Especially as gas prices are creating larger than normal exposures on your aging report. That said, with the inflated gas prices, how are you protecting yourselves from large true-ups at policy end?
We’ve seen large true-ups due to policies priced on too high of a rate on sales or not carrying large enough buffers to adjust for these high prices. You may make the same profit per gallon but being charged on inflated sales, resulting in extra premium. What if there was another way?
Our group has partnered with a micro-bonding company to be, when it makes sense, a replacement for credit insurance. These bond programs have major competitive advantages. No true-ups, no credit limit fees, 100% indemnity, non-cancellable limits, no coinsurance, no deductibles, and claims paid in 48 hours. They are competitively priced with credit insurance. While a micro-bondmight not be right for every company, I’d encourage you to reach out to us and run the numbers. At the very least, we can review your current policy and see how it stacks up against your peers.
We recently closed the first fuel micro-bond program in the USA and have many more lined up to complete. This company has now joined the circle of BP and Shell who also utilize bond programs in lieu of credit insurance. While this is a common program in Europe, this is a fresh new product for the USA. I’d encourage everyone, especially current credit insurance policyholders, to contact us to explore how it could help their business.