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Companies with trade credit insurance are more attractive to a bank

When granting loans, the bank asks for collateral. Among other things, outstanding receivables can be pledged. A trade credit insurance offers additional security. Discover how to earn your bank's trust with a trade credit insurance.
When extending credit, banks look at companies' financial statements, among other things. By pledging assets, banks secure repayment of the credit. In addition to buildings, machinery and inventory, for example, outstanding receivables can also be pledged. But how secure are these outstanding receivables for the bank? And why do banks require collateral such as buildings and machinery to be insured (against fire, natural disasters or other catastrophes), while the requirement for trade credit insurance on trade receivables is much less common? 

How stable is the value of trade receivables?

Almost a quarter of entrepreneurs of bankrupt companies cite unpaid invoices as the main cause of their failure. Businesses with concentrated customer risk are especially vulnerable.

The quality of accounts receivable can quickly deteriorate, causing a domino effect. If there are then insufficient liquidity buffers, a shortage of working capital arises, directly jeopardizing day-to-day operations. SMEs are more vulnerable to this than large companies. This can be a major risk for the bank.

companis-more-attractive-with-trade-credit-insurance

Companies with trade credit insurance limit bank risk

Companies working with a trade credit insurer gain a better understanding of the quality of their accounts receivable portfolio. Through a debtor scan, the portfolio is clearly mapped out:

  • What is the risk category of each debtor and how is average debtor risk?
  • What are the concentrations in my portfolio on:
    a. Certain companies?
    b. Sectors?
    c. Countries/regions?

Continuously, the trade credit insurer monitors these and other risk factors and makes this information available. Based on the credit limits the insurer issues for existing debtors and prospects, companies get a clear picture of the creditworthiness of companies with whom they do business.

What are the benefits for you and the bank?

The benefits for your company

  • FASTER PAYMENTS
    Your customers will pay 5 days faster on average if they know their invoice is insured. Companies have an interest in being considered as “healthy risks” by trade credit insurers. In the event of negative payment experiences, their credit score will be adjusted, and they will no longer be able to buy on credit (from you or others).
  • INTERNATIONAL NETWORK
    We work on a global scale, helping you to explore new business opportunities in other countries and sectors. We have offices all over the world. We know local business habits. We can also provide you with market information.
  • COMPENSATION FOR UNPAID INVOICES
    The most important thing about trade credit insurance is that you can be sure of your money. If an invoice remains unpaid, the credit insurer takes care of collection and you get paid.

The benefits to the bank

  • LESS CREDIT RISK
    With a trade credit insurance, you protect your company from bankruptcy due to liquidity problems. For the bank, it's an important form of security.
  • HIGHER VALUATION OF YOUR ACCOUNTS RECEIVABLE
    The bank values your trade receivables higher if you have also taken out a trade credit insurance. This enables you to reduce the expected loss or grant more credit for the same risk.
  • BETTER CUSTOMER MONITORING
    All the information we provide enables better monitoring of your company's credit risks. As a result, the bank can better monitor your company's healthy growth.

 

 

What is a trade credit insurance?

Informatie over de financiele situatie van jouw klanten
Information about debtors
Access our database with information on the financial situation of companies worldwide. This allows you to decide which customers to do business with, including those abroad.
Kies de juiste klanten en markten om zaken te doen
International collection
Is a customer not paying? Then our collection team goes to work for you to still collect your money. You benefit from our collection network in more than 50 countries.
Wij betalen de schade die jouw bedrijf oploopt als klanten de facturen niet betalen
Claims payment
Do we fail to collect your unpaid invoices or does your customer go bankrupt?  Then you will still get your money through our trade credit insurance.