Credit insurance protects your business against the risk of bad debts caused by either the insolvency of one or more customers or protracted non-payment.
Credit insurance can also:
- Protect your business against the unseen and provide a firm foundation for growth.
- Provide access to unique financial information on existing and new customers.
- Provide sophisticated worldwide debt and legal collection services.
Credit insurance enables your management team to concentrate on developing secure and profitable business so that you can trade confidently in a risky market environment.
Credit insurance is available for both your domestic and export customers. Cover can be tailored to meet your needs so that you can avoid the potentially disastrous effects of bad debt losses.
Types of credit insurance policies that are available:
Whole turnover domestic credit insurance
This type of policy is designed to cover your entire turnover with customers in the UK against insolvency and default. Policies are usually structured with an excess of between £500 and £1,000. Many underwriters are now offering fixed premiums inclusive of credit limit charges as well as an integral collections facility.
Whole turnover export credit insurance
This is similar to whole turnover domestic credit insurance but is designed to cover your entire export turnover.
Combined domestic & export credit insurance
This is also similar to to whole turnover domestic credit insurance but is designed to cover a combination of domestic and export sales.
Specific account credit insurance
This policy is designed to cover a single customer, which in many cases would be the largest account on your ledger. Most policies cover insolvency only and an 'indemnity' is applied to the credit limit granted, usually between 80% and 90%, so that you share in the risk with the insurer. This type of credit insurance policy is not designed to cover a customer where there is perceived to be a higher than average risk.
Key account credit insurance
This type of credit insurance covers a selection of between 2and 20 of your customers, usually the largest accounts on your ledger. These policies normally cover both insolvency and protracted default and an excess would apply.
Catastrophe credit insurance
This type of policy is designed to suit companies with turnover in excess of £10 million which have effective and sophisticated credit control procedures. On this basis, the insurer 'underwrites' the credit control procedures and sets an 'annual aggregate deductible' in excess of which claims are payable. The deductible is set at a level of at least £25,000 and most commonly at between £50,000 and £100,000.
Global credit insurance
This type of credit insurance would suit a multinational company with trading centres in several countries. A single policy would be structured to cover all the divisions or branches on either a 'whole turnover' or 'catastrophe' basis depending on the individual requirements.
Bonds and guarantees
Bonds and guarantees are written promises provided by a 'surety' or 'guarantor' which undertakes to pay for direct loss and damage suffered by a third party, the beneficiary of the bond. They are issued to provide the beneficiary with protection against breach of contractual obligations by the surety or guarantor's client. In many instances the surety or guarantor will retain the right to mitigate the loss or, in some instances, arrange for the completion of the contract.
Performance bonds guarantee that the contractor will perform the contract in accordance with the terms and conditions of the written contract. Bonds and guarantees can facilitate financial transactions such as the sale of a business and ensure that obligations are performed in a timely manner.
There are many types of bond and guarantees available covering virtually all scenarios subject to the underlying security and risk being acceptable to the surety or guarantor. Some of the more common types are:
- Performance bonds.
- Construction bonds.
- VAT and duty deferment bonds.
- Deferred payment guarantees.
- Advanced payment bonds.
Why Pegasus Funding Resources?
At Pegasus Funding Resources we have an extensive panel of direct insurers and specialist brokers available to us. Our services to you are free of charge so let us find the best insurance policy or bond that suits your requirements so that you spend time increasing your profits.
To find out more please contact:
Richard Olsen on 0203 327 0567 or email: [email protected]