Credit insurance is a solution for business-to-business in the following cases:
- Your company has suffered credit losses
- The customer of your company has gone bankrupt
- Bankruptcy of your key customer endangers the future of your business
- Your company regularly sells to new customers / new markets
- You need help analyzing the financial health of your customers
- You want to improve the cash flow of your business
Credit insurance is good for your business
Credit insurance is a modern proactive tool that helps protect one of your company's largest assets - trade receivables. Credit insurance protects your income and cash flow against sudden credit losses and customer bankruptcy losses. Typically, insurance covers loss of trade receivables caused by customers' insolvency. The insurance can cover both domestic and export receivables. Foreign trade needs also protection against political risks.
Credit insurance can help your business in many ways:
- It offers cost-effective protection against unexpected payment defaults on your customers.
- It provides access to up-to-date detailed information on your customers' financial status as well as general market information from different countries.
- It provides early warning if your customer is in trouble.
- It complements your company's credit control processes and encourages good credit management practices.
- It gives you the confidence to increase sales to your creditworthy customers.
- Quick compensations ensure that a credit loss cannot jeopardize your company's cash flow in the event of an accident.
- Credit insurers provide also international debt collection services, and some of these costs may be covered by insurance.
- Many financiers have a positive attitude if your trade receivables are covered by credit insurance.
If your customer does not pay, then credit insurance will ensure that your business's cash flow is not compromised. Of course, insurance compensation is an integral part of credit insurance, but it is not just a transfer of risk to the insurance company.
Many large multinational companies already use credit insurance, but it is also becoming an important part of managing credit risk for Small- to Medium-Sized Enterprise (SMEs). Information and debt collection services provided by insurance companies significantly simplify corporate credit management processes and workload. Today, interdependencies and subcontracting relationships between companies are so extensive and rigid that knowing your own customers is no longer enough to anticipate potential problems. You cannot simply be prepared for all surprises.
Finnish industrial companies, especially forest industry companies, have been using credit insurance for decades. Today, service companies also buy credit insurance. Companies in almost all industries that are trading with credit can use credit insurance.