Insuring accounts receivable ensures business will be around tomorrow.  With the economic climate changing dramatically for the worse over the last six months, your client’s business should have a strategy in place to manage a catastrophic bad debt loss. Credit insurance, an add-on that most agents can easily offer, can help you safeguard your clients’ business against failure.

Credit insurance ensures that your clients will be paid for merchandise or services delivered to their customers.  In general, credit insurance covers the unpaid credit balance from sales made to customers located in the U.S., Canada and throughout the world.

With growing signs of U.S. economic downturn, offering credit insurance to your clients has several important benefits. They include:

1. Allowing you to provide additional services to clients
2. Protecting your customer base from outside brokers seeking similar opportunities.
3. Providing you with a marketing tool to offer a new, economy-sensitive benefit.
4. Protecting your agency by making your client’s aware of the existence of an available service.
5. Increasing revenue for your agency and for your customer.

Selling your clients on the benefits of credit insurance is easy because the benefits they can derive are great. They include:

Safeguarding one of their largest assets.  Credit insurance protects against a devastating loss to an unprotected asset – accounts receivable.

Supporting sales goals.  With credit insurance your client is free to expand into new and unfamiliar markets much more comfortably.  They may also be able to generate more sales by extending larger lines of credit than they might normally offer.

Strengthening credit risk-management controls.  To ensure that your client is selling to creditworthy customers, we track 50 million companies around the world.  This extraordinary depth of information gives you the detailed knowledge your client needs when deciding to extend credit.  We also have the ability to collect past due accounts around the world.

Eliminating expenses and burdensome letters of credit

These products provide a real-time response to the changing political and economic climate. For instance, our company provides political risk protection. It is designed to cover the activities of companies engaged in international import or export contracts, as well as investments or financing-linked to operations abroad. The responsive nature of credit insurance and an agency’s ability to present it to clients as a benefit are much of its appeal in building the rapport with clients.

Credit insurance also provides flexibility. Each credit insurance policy is tailored to the individual needs of the business so coverage details will vary.  In general, a company covers all or a majority of its business, and may choose to cover export, domestic, or both types of accounts.  Policyholders are eligible to file a claim when a customer is insolvent or unable to pay the outstanding balance owed.

In business, extending credit to customers is a fact of life.  So is the risk that goes with it.  Credit insurance can remove much of this risk.

Joe Noto  is regional director of broker relations for Coface North America Inc.’s Southern Region. He can be reached at 410-517-2345, ext. 203, or by email.