What are Euler Hermes’ responsibilities?
 

• It is our responsibility to continually monitor your buyers’ financial health, including alerting you in the event that a change in their status impacts our ability to cover the buyer. An important part of our process for conducting this ongoing analysis is proactive outreach to your buyers to request updated financials – a step which we can often work in partnership with you to be more successful.
  
• Indemnification of covered buyers – In the event of a bad debt loss on one of your covered buyers, you may submit a claim and we will pay it promptly, per the parameters of your policy wording.
  
• Provide you with timely and actionable economic intelligence, strategic forecasting, and market-specific analysis that can help guide your strategic business decisions.
  

What are your primary responsibilities?
 

• Submitting credit limit requests and monitor status in EOLIS.
  
• Submitting overdue declaration on all covered past due buyers in EOLIS.
  
• Completing a turnover declaration to declare insured turnover at the end of the policy year in EOLIS.
  
• In the event of a claim, customers must submit a claim form and all accompanying documents by their claim filing deadline.
  
• Ensure you follow the debt collection policy in case of overdues.
  
• Collaborate with us to obtain financials – One important source of information from which we base our credit limit decisions is the exclusive information Euler Hermes receive when we contact buyers in order to obtain updated financial statements. Our customers’ partnership in this effort can help improve our mutual success. Consider providing your permission for us to disclose your company’s name to your buyers when we contact them for financials, as this makes them statistically more likely to respond.

Our job is to work with you to protect your business and aid its growth. That means managing your cover and your exposure to risk. As part of this process, you will need to set credit limits. How does this work?

In order to be covered by your Policy, you must have a valid credit limit in place with each individual customer.

Find out more below.

Setting your credit limit

STEP 1: DECIDE THE MAXIMUM AMOUNT OF CREDIT YOU WISH TO GRANT TO YOUR CUSTOMER.

First, you need to calculate the maximum outstanding amount. This is the highest amount owing by a customer for sales you have made to them and which hasn’t yet been paid.

Let’s take this example: You are trading with company ABC Inc.

• You have quoted for three deliveries: Two for an amount of €15,000 and one for
  €10,000.
• The deliveries are scheduled 30 days apart and the terms of payment are 90 days.
• Every 30 days, you deliver and ABC Inc. pays you on schedule within the 90 days.
  

The outstanding amount is represented in this graph:

In this case, the outstanding amount will be €15,000 in January, €30,000 in February and €40,000 in March. The maximum outstanding is €40,000. You should set your credit limit at €40,000. If there are further orders, then you will need to reassess this maximum amount.

You should consider a few things when setting your credit limit:

• Does your customer regularly pay you on time?
  Adding additional unpaid invoices will increase the amount
  outstanding. Your credit limit should be higher.
  
• Is your business cyclical?
  If your orders are higher over Christmas for instance, you may need to increase your credit limit and your cover temporarily.
• Are your sales regular over the year?
  Here’s a trick for calculating your average outstanding per month: [annual sales / 360] x terms of payment, or [monthly sales / 30] x terms of payment

How to apply for a credit limit

You can apply for an Approved Limit in EOLIS. Read our guide: How to apply for a credit limit.

In many cases, we will approve the limit online immediately. We will confirm the limit by email. Once you receive the Approved Limit endorsement, please check the details to ensure that the customer is correct.

What happens after the withdrawal of an approved limit?

When we withdraw an Approved Limit (including when we endorse a nil Approved Limit), it is because we consider the risk has increased significantly.

The withdrawal becomes effective and your cover ceases. If you have an approved Delayed Effect Period, usually 30 days unless specified otherwise, your cover will cease after this period. You will be covered for any goods or services you supplied under the Approved Limit (provided you have appropriate justification) during the Delayed Effect Period.

We will put in place a shorter withdrawal period at times depending on the information we have. When that happens, it will be noted on the credit limit under Special Conditions.

Once cover has been withdrawn, you may no longer use your Approved Limit even if you have the appropriate justification.

How to apply for a credit limit

As a supplier of goods or services to organisations, it’s vital that you get paid on time. That’s why it’s so important to ensure you work with reliable businesses with good credit histories.

Before you seal a deal to supply a new customer, your first course of action should be to do your own research and then to apply for a credit limit with us. A credit limit is simply the value of sales outstanding at any one time we can cover between you and your future customer.

For example, you might want to cover €10,000-worth of business. You make the application and we will come back with a decision to fully approve cover, to reject cover, or to cover part of the amount you requested.

Applying for a credit limit: Step-by-step
 

1. Log in to our online portal EOLIS and go to the Quick Menu > Apply for Limit
2. Search for your customer by inputting the company details in the relevant fields.
   
   - To identify your customer, use the company identifier. Names and addresses don’t always do the job because there are plenty of companies with the same or similar registered or trading names. Be aware that VAT numbers alone are not always reliable identifiers. In some cases, they are not publicly available, and in others they can be shared between more than one entity.
   
   - If a company identifier is not available, search by name and address, then enter as much accurate information as you can. This could include:
       -    Full customer company name directly followed by its legal form (ex: ABC Company Limited)   
       -    Full address and postcode - in some countries, state or province may also be compulsory
   
   - If you still can’t find your customer in the list, it means the business you’re looking for might not have been set up yet in our sytem. Please provide as much relevant information as possible. This could include email addresses, a company registration number, the names of directors/ owners and your contacts as well as the company’s VAT number, if it has one.
3. Enter the amount of your credit limit request and check the payment terms
4. Confirm to send the application back to us electronically
5. We will come back with a decision. You can see the decision in EOLIS and you will receive an emails as well.
   
   - If the customer was already set up in our system, a decision will be given quickly.
   - If we need to investigate a new business, it might take a little longer.
   
   You can keep track of your pending requests in EOLIS at all times.

How do we assess your customers?

The main sources to ascertain a business’ financial strength are its annual accounts, its management accounts and its historical payment performance. Some of it is public information, while the rest can be uncovered by talking to existing suppliers and searching for evidence of contracts gone bad.

With access to a vast spectrum of Nordic registered company data, we are kept up-to-date with adverse judgment events on companies as and when they happen. Similarly, in international territories we can check if the legal system has had to act to enforce payment in the past.

We investigate the customer with site visits, we review payment performance information, and we take into consideration the general economic conditions in the country where the company is based. By putting all this information together, we create an overview of their risk profile.

How to fill out your turnover declaration

Your insurance premium is based on the estimate you provide us for the value of insurable sales over 12 months.

However, at the end of the policy period it’s likely that your predicted and your actual insurable sales are two different numbers. In a Turnover Declaration, you tell us the true value of your insurable sales and we use this to calculate the exact premium due for the previous year.

Why is it important?

At the beginning of your Policy, we charge a premium based on your expectations for business in the coming year. But your actual sales could be more or less, depending on how the business has performed in that time.

If your sales are higher than expected, we will have covered a greater value than forecasted and we will send you an invoice for additional premium. If your sales are lower, then we will have covered less than expected and will reimburse part of your premium, capped at the minimum premium specified in your Policy Schedule (usually 90% of expected premium).

Example:
Let’s say your expectations for business next year are €20 million and your premium rate is 0.2%, so your premium is €40,000. Your minimum premium would be: €40,000 x 90% = €36,000.

A Turnover Declaration is important because it helps us calculate the true value of your Policy, so you pay a fair price for cover. Because of this we must receive completed declarations in order to continue providing credit limits and settling any claims.

Who must fill out a turnover declaration?

Your Policy will tell you if you need to complete a form and we will send a reminder when it is time to do that. Not all businesses have to complete a Turnover Declaration: For example, companies on fixed premiums don’t. These are generally smaller businesses that do not trade in international territories.

What information should I include?

THE VALUE OF GOODS AND/OR SERVICES SUPPLIED
This should be for any business conducted between the dates shown on your form (inclusive). It should be the full insurable turnover of your company and joint insureds on your Policy. Please don’t reduce the figure by adding credit notes or rebates as we covered the full amount when the invoice was raised.

CURRENCY
You need to write the amounts in the currency shown on the form.

COUNTRIES
You must declare turnover for every country that is endorsed to your Policy. Conversely, please don’t add countries that are not covered by your Policy with us.

Common mistakes

We all make mistakes, and while we have taken great pains to make our Turnover Declaration forms as simple as possible, there’s always a margin for
error. To help you avoid mistakes, here’s a list of the most common errors we see in returned forms:

THE WRONG KIND OF TURNOVER
Probably the most regular error we see is when total turnover is quoted instead of insured turnover. Remember that your declaration should only include sales covered under your Policy.

MISSING FIGURES
When you complete the form, check that you haven’t added a zero off your insurable turnover, for example, or forgot to write the total sales figure on
the final page of the form.

MULTIPLE SECTIONS
You may need to complete a Turnover Declaration that is composed of more than one part. For example, in cases where you have declared establishments
in other countries. Don’t copy the information of the first part into the second or leave the second part blank (see above ‘What information should I include’).

UNENDORSED COUNTRIES
Only include countries that are endorsed to your Policy.