The main objections we hear are;
- Too expensive
- Administrative red tape
- Complicated rules of the game
- 'I only supply triple A customers'
- 'I have known my customers for years'
Too expensive
So when do you hear that a proposal is 'cheap? Not often. So it is fair to say that 'too expensive' is a relative term. Often organisations look at their debtor losses from previous years, but credit insurance actually looks to the future. After all, can you guarantee that the amount of those losses from the previous year will be the same as the year after? Probably not.
Xolv makes it clear what you get in return for this 'investment'. We map out all the benefits for you, one of which is receiving a claim payment.
Administrative red tape
You may be afraid that insurance involves a lot of extra work, but this is not so bad. The most important things to look out for when taking out credit insurance are the credit limit and time limit. We list all the points for you:
- Apply for credit limit: you can do this very quickly through the insurer's online connection.
- Time limit: the date until which you can continue to deliver after the invoice due date (usually 60 days).
- Monitoring invoices: you can already do this without insurance.
- Collection transfer: within a pre-agreed deadline.
- Premium payment: through advance notes (monthly or quarterly).
- Furthermore, you should report your insurable turnover once or twice a year.
Complicated rules of the game
In fact, the rules of the game used by a credit insurer are the same as those of a 'good merchant':
- You set a limit before delivering.
- You maintain a supply freeze for new deliveries/orders when the most old outstanding invoice remains unpaid XX days (usually 60 days) after the due date.
- You ensure adequate debtor management and transfer collections on time.
'I deliver only to triple-A debtors'
You may wonder whether gilt-edged debtors even exist. After the tremendous support packages related to COVID-19, we expect the government to increasingly withdraw as a major financier.
Often, a 'gilt-edged debtor' does not match the credit rating of an (objective) credit insurer. In other words, buyers who have been known to you as suppliers for years and have paid you faithfully will soon be marked as 'gilt-edged'. On the contrary, a credit insurer looks at several facets.
Incidentally, excluding gilt-edged debtors is negotiable. Think of the Dutch banks, Shell, Unilever and such large groups. In such a case, it should be a win-win situation for both parties: the insurable turnover should be interesting for the insurer after exclusion. Incidentally, an exclusion will always have a premium-increasing effect. After all, you are committing selection at the insurer. However, the absolute premium amount will be less as you will only pay premium on insurable turnover.
'I have known my debtors for years'
This is often pleasant business. You have already established a relationship and gained experience. And perhaps there is also good personal contact. But what guarantee does this give for the future? Will your debtor be the first to inform you, the supplier, of his financial woes? Telling bad news to an acquaintance is generally a lot harder than informing a stranger of the bad financial situation. And does the prospect also know his customer's buyers?
Want to know more?
Do you want to do business carefree and avoid your own payment problems? Xolv is all-round when it comes to credit insurance. Contact our specialists and we will make sure your business is optimally insured and financed.
