The principle of credit insurance
The principle of credit insurance is clear: it covers the non-payment risk if your customers (debtors) can no longer pay your invoices due to bankruptcy or suspected insolvency. Traditionally, you apply for a limit from your credit insurer to ensure that quickly find out whether your debtor is creditworthy.
That gives a nice feeling; on the one hand, it says something about your customer's financial situation and, on the other, you know that your invoices are covered. Is the requested limit too low or not honoured at all? Then Xolv's specialists will be happy to assist you in consulting with insurers about (higher) coverage. Clear story, right?
No coverage on your farm
But what if we turn the situation around? Suppose your loyal supplier - at home or abroad - tells you, out of the blue, That you are no longer good for your money. He has credit insurance and his limit on your business has been reduced. Or even worse: that limit has been withdrawn. All the while you always pay nicely on time...
You are heavily dependent on the goods of this important supplier. But without a (sufficient) limit on your business, the supplier can only do one thing: ask you to make an advance payment. And that goes at the expense of your working capital, and therefore freedom and room for manoeuvre that you, as an entrepreneur, would like to have. Moreover, in this corona crisis, it creates even more uncertainty.
'What now!'
"Huh, why won't my supplier get coverage on my farm?", is no doubt your first reaction when the above hypothetical scenario becomes a reality. By the way, the chances of this happening grow with every day that the measures around the coronavirus are in place. Your second reaction will be: "Now what! We have good news for you: Xolv can help you get coverage on your own farm.
First of all, there is something you can do yourself. When a supplier indicates that they are not getting coverage or insufficient coverage at your company, then ask the supplier for a copy of the limit decision showing this. Then share this information with us. Our Xolv Risk analyst will then consult with the relevant credit insurer (where your supplier is insured) about the reason for the decision and what is needed to restore (partial) cover. When insurers are informed first-hand by you as debtor, there often turns out to be more possible than initially thought.
So if - unexpectedly! - the request from a new or existing supplier to pay in advance, it pays to consult Xolv. Especially in this time of corona crisis, when the financial situation can change by the day (or sometimes even by the hour). To do so, contact your Account Manager or directly our Xolv Risk colleague Coen Blazer. We will be happy to help you find a suitable solution!
