Debtor's Insurance

Every time you deliver on credit to a customer, you run the risk of not getting paid. Effective debtor management is essential to reduce this risk. Yet you can never completely eliminate the risk. Debtor's insurance then offers a solution.

What is a debtor's insurance?

With debtor's insurance, you insure the losses your business suffers due to non-paying debtors. Another commonly used term for this is also called credit insurance. The risk of debtors not paying your invoices is called the debtor risk. All companies that supply other companies on credit face this risk at different degrees. It can disrupt your cash flow and have a negative impact on profits. But how do you determine what your debtor risk is and whether taking out debtor insurance is a good idea for your business? We will tell you more about this in this article.

Debtor's insurance compensates your business for losses incurred if a debtor can no longer pay your invoices. Usually because this customer is bankrupt or has financial problems. Debtor insurance cannot help you if your customer does not want to pay or has committed fraud. There are other solutions in the market for this. Debtor's insurance, therefore, gives you certainty of payment, preventing your company from getting into trouble itself. It is a very valuable tool in your credit management process. Debtor insurance in a nutshell:

In our database of more than 85 million companies worldwide, you will find information about your customers and prospects. This information helps you better assess and manage your debtor risk. So you know who you are doing business with and on what terms.
Does a customer still not pay? Then you transfer the outstanding claims on this customer to us. Our collection department with a collection network in more than 50 countries will then work for you to still collect your money, even abroad.
Does our debt collection department also fail to collect your money. Or is your customer already bankrupt? Then we will pay the damages to you. Depending on the agreements made, this can be as much as 90% of the total amount.
Delivering on credit, and therefore taking a risk, is not necessarily wrong. In fact, by doing so, you encourage a customer to spend more money with your company and you can distinguish yourself from competitors who do not deliver on credit. However, you should make sure you are aware of the risk involved. As many as 1 in 4 bankruptcies are caused by an invoice being paid late or not at all.
If you deliver on credit, it is wise to take a close look at your debtor portfolio. It is good to list for yourself what financial impact this has on your business. With professional credit management, you can mitigate some of this risk yourself. A useful tool for this is to do a creditworthiness check. Still, it is no guarantee that all customers always pay their invoices. Even if your customer is doing so well, there may always be things going on in the background that you are unaware of. Do you want to cover your default risk completely? Then debtor's insurance may be the answer.

To protect your business from late payments, debtor risk management is essential. It is the executable plan you use. It helps secure your cash flow and improves the performance of your business. How best to design debtor risk management varies from business to business. Experts agree that the following general best practices are a good guide for any business when managing debtor risk. In summary, these include:

  1. Identifying debtor risks
  2. Evaluating the potential damage it may cause
  3. Drawing up a plan to structurally monitor your debtor risk
  4. Strategically hedging credit risks.. 
We offer several debtor risk management solutions. Schedule a non-binding consultation with one of our advisers and discover the options that suit your business.

Choose more security for your debtor management

You would rather be busy doing business. We understand that like no other. With our credit insurance, we provide more security in your credit management. Then you no longer have any doubts about whether you should take on that big order. And you will not lie awake wondering whether a large invoice will be paid. Credit insurance provides payment security. A lot of misery is prevented and you can concentrate on your own business to the maximum. Credit insurance is no guarantee that customers will always pay your invoices, but if things do go wrong, we will compensate you for the loss.