Business people across Australia face greater risks in today's economic climate than perhaps ever before. It only takes a few customers to default on payment and your business could suffer dramatically. At such times it makes sense to protect your assets and ensure the wheels keep turning. A solid credit management system can help maintain consistent levels of that all-important cash flow and take the burden of debt recovery off your shoulders.
Credit insurance services can provide the support and protection needed to cushion you from the unexpected as your business continues to develop. Before you sign on the dotted line, here are 9 vital questions you should ask.
1. How will credit insurance help my business?
Experts identify, protect and manage your cash flow to enable you to focus on making sales and growing your business.
Experts identify, protect and manage your cash flow to enable you to focus on making sales and growing your business.
2. Will it protect me against payment default from overseas customers?
As well as local and national protection, most insurance companies provide international coverage for accounts receivables in the form of export and political risk insurance.
As well as local and national protection, most insurance companies provide international coverage for accounts receivables in the form of export and political risk insurance.
3. How will I know if my business needs this?
Any company that provides credit terms to its customers benefits from insurance to protect itself from bad debts and default payments.
Any company that provides credit terms to its customers benefits from insurance to protect itself from bad debts and default payments.
4. Will it cover all of my customers or selected clients only?
Coverage usually includes all customers invoice on open credit terms, although it is also possible to selectively designate high-risk customers up to a maximum indemnity level of around 90%.
Coverage usually includes all customers invoice on open credit terms, although it is also possible to selectively designate high-risk customers up to a maximum indemnity level of around 90%.
5. How much will credit insurance cost me?
The cost of your policy will depend on your company turnover, number of customers, and the extent of your business at home and abroad. Typical coverage works out at 0.5% of your total insured turnover worked out over 12 months and payable in monthly installments. Policies are usually signed and effective for a one year period, renewed on an annual basis.
The cost of your policy will depend on your company turnover, number of customers, and the extent of your business at home and abroad. Typical coverage works out at 0.5% of your total insured turnover worked out over 12 months and payable in monthly installments. Policies are usually signed and effective for a one year period, renewed on an annual basis.
6. What amount of coverage will I receive?
Credit insurance coverage is calculated in terms of expected sales turnover and the payment terms offered to customers. For clients with sales turnover potential of AU$480,000 on payment terms of 60 days, the calculation would be AU$480,000/12 x 2 = AU$80,000.
Credit insurance coverage is calculated in terms of expected sales turnover and the payment terms offered to customers. For clients with sales turnover potential of AU$480,000 on payment terms of 60 days, the calculation would be AU$480,000/12 x 2 = AU$80,000.
7. How do I make a claim if customers fail to pay me?
If payment is not received within agreed time parameters, you can submit a claim form to your broker who will begin the claims process on your behalf.
If payment is not received within agreed time parameters, you can submit a claim form to your broker who will begin the claims process on your behalf.
8. Are credit insurance claims guaranteed to be paid?
All claims will be paid up to the indemnity level of outstanding invoices, provided the customers in question are covered under the terms of your particular policy.
All claims will be paid up to the indemnity level of outstanding invoices, provided the customers in question are covered under the terms of your particular policy.
9. Will brokers provide financial help and support throughout the term of the policy?
Your insurance experts will design a policy to meet your needs and assign a broker to your account from day one.
Your insurance experts will design a policy to meet your needs and assign a broker to your account from day one.
Contact your local credit insurance specialists today to find out more about the benefits and protection tailor-made credit insurance can provide for your business.
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