Whole turnover Credit Insurance premiums are calculated by taking into account your estimated insurable turnover, bad debt history and industry trade sector. The actual credit insurance cost starts with premiums of approximately £2,500 for small businesses (under £500,000 turnover) and are charged either on a fixed price basis, or as a percentage of your estimated insurable turnover and can usually be paid monthly or quarterly by direct debit.
Non payment by a business of a trade debt due to insolvency or inability to pay. You will not have to increase your sales dramatically to cover the cost of the loss. Cover is available for goods delivered or services provided, as long as the sale is business to business on credit it can be covered
Credit sales turnover to a business covered fully or in part under the policy by an underwriter written limit or as part of the Discretionary limit cover. You do not have to pay premium if an underwriter declines cover. If you are supplying a UK government buyer directly there is deemed to be no risk therefore this does not form part of your insurable turnover.
There are a number of insurers who have products tailored specifically for small businesses or businesses who are new to credit insurance. These include Euler Hermes’ Simplicity policy, Atradius’ Modula Freedom policy, QBE’s Approve policy and our own Credit Insurance Direct policy underwritten by Coface. The benefit of these policies is that they have fixed prices, based on your insurable turnover and loss history, that include a number of benefits such as collection services and discretionary limit facilities as standard. They tend to also have lower minimum premiums than other products in the market at approximately £2,500 – £3,000. At Acumen we have a team of staff dedicated to sourcing and servicing credit insurance policies for small businesses and as such can help find you the most suitable policy.
Protracted Default means the failure of a buyer (customer) to pay a debt within the agreed payment terms.
The most cost effective policies in the market are “whole turnover” but we will work with you to find the best policy option for your needs. You will have the best cover for the lowest price.
Yes, but this may not be the best option. Underwriters raise the quality threshold and higher minimum premium levels will apply. Selecting whole turnover or a group of top accounts may be a better option.
Unlike Whole Turnover and most other policies, single risk policies are priced on the value of the credit limit rather than the insurable turnover. As you would expect the price is based on the strength of the buyer and the value insured which means the credit insurance cost can vary from a fraction of a percent of the credit limit to as much as 8 or 9 percent.
Insurers spend a significant amount effort on monitoring insured buyers, and if significant negative information is received they may decline to cover future deliveries but the goods or services already provided are covered. Your credit management will be significantly enhanced leading to fewer bad debts in future.
Most credit insurance policies have a clause allowing a 30 day grace period so that trade can continue while further information allowing an evaluation of the negative information can be sought. If your contract of sale is legally binding such cover can be added. Cover will be maintained unless it is clear that the buyer is about to fail.
Most policies have a “Discretionary Limit” where underwriters delegate the smaller limits back to the policyholder. A policyholder can maximise cover by using trading history and other means to justify insured credit limits.
The majority of Credit Insurers will not insure disputed debts, so any dispute must be settled by binding arbitration in order for a claim to be made. Credit insurers have built up an extensive support network to help collect overdue accounts in the UK and far off places but if this fails a claim will be paid within 6 months of due date. You don’t have to worry about negotiating solicitors fees in export markets.
As you will see if you go to policy types, there are a vast number of different policy types available in the UK Market. Underwriters are introducing a number of exciting new policy concepts and while not all these policies will be available to or suitable for you, Acumen Credit Insurance Brokers go through regular product refresher courses to make sure we can tailor a solutions which best serves your needs.
At each renewal your Acumen Credit Insurance Broker will establish if there are any shortfalls on cover and carry out a full market review to benchmark both price and cover so that you can be sure that your policy truly is the best cover at the best price.
Your Broker should be supporting credit limit applications, claims and demonstrating at renewal that your current arrangements are the best available with evidence of other Underwriter’s offers.
Yes. Acumen Credit Insurance has the widest footprint of a national UK Broker and as a founding member of Credea we can offer support on a worldwide basis.
A team of claims support staff which Euler Hermes tell us results in quicker claims payments than any other Broker or their direct policyholders. Policy management through the year dealing with credit limits or amendments to the policy structure with general advice on credit control and any other related issues. A full policy remarket at renewal to make sure you have the most appropriate policy for your needs.
Unless the credit limit required is substantial, £500K or more, you should consider switching your underwriter. You should request Acumen Credit Insurance to review the cover provided by other underwriters.
Most factors and receivables funders will increase the valuation of the sales ledger as security if it is supported by trade credit insurance. You should be able to negotiate a better lending rate.
Separating your trade credit insurance provider from your lender gives you greater flexibility and can reduce the credit insurance cost depending on a number of criteria. You should speak to one of our brokers for a full response.
Debt Protection is provided by a lender in support of a facility. When you change funder you need to renegotiate the protection. Other differences include the credit insurance cost, cover offered and bespoke options availability. Read our page about support for funding for more information.
Most credit insurance policies cover debt from the dates within the policy period created through to payment (Risks attaching). A policy start date should be agreed that picks up the historic debts by the invoice dates.
In addition to the non payment by your customer the cover will be extended to Political Risk. Should the country of your buyer block, or be unable to make the payment you can claim on the policy.
Yes. If the country runs out of foreign exchange you can make a claim.
Unless the ILC has been confirmed by stable UK or OECD bank you should cover the risk. If an unstable foreign bank fails you are covered for the loss.
Underwriters differ on this point. The risk that a foreign bank will release the documents of title without making the payment is real and happens frequently as does overseas bank failure. The risk evaluation is up to you but cover is available.
This will probably be determined by cost and minimum premium levels for export policies are generally higher than UK only policies. It may prove more cost effective to include export in a domestic plus export policy.