Credit insurance companies can obtain legal partnership through IA Group.

Protect against loss of future receivables

Credit insurance products offer protection against loss of future receivables. These policies are useful to businesses that are just starting out or don’t have any existing customers to cede to the insurer. Credit insurance policies that provide coverage for future receivables are often referred to as “put-back” policies. When selecting a put-back policy, be sure to understand the difference between “retroactive” and “proportional” coverage. – Retroactive coverage. Retroactive coverage means that the credit insurance company will cover the amount due for a specific date in the past. With retroactive coverage, you select a date when you want the policy to go into effect. – Proportional coverage. Proportional coverage means that the credit insurance company will pay the percentage of the claim that the policy provides coverage for. With proportional coverage, you select a coverage amount that is a percentage of the total sales amount.

Ensure you have a claim trigger and an escrow hold

When selecting a credit insurance policy, it is important to understand what triggers a claim. A claim trigger occurs when a customer fails to pay the debt that your business is owed. Credit insurers will place a hold on the funds in the customer’s account. This type of hold is called an escrow hold. With an escrow hold, the credit insurer will not release the funds until the customer pays the debt or the claim is settled. Some credit insurance policies have a “straight” trigger, meaning that a claim is triggered when a customer is 30 or 60 days late on their payment. Be sure to select a policy that has a “no-pay” trigger, meaning that a claim is triggered only when a customer is 90 or more days delinquent.

Protect against loss of operational cash flow

Credit insurance policies can also protect against loss of operational cash flow. This type of credit insurance covers the payment due to suppliers when your business cannot pay. To select the correct policy, pay attention to the following factors: – The amount of coverage. The amount of coverage you select will depend on your risk tolerance. If you are a small business owner with limited equity or savings, you may want to select a lower coverage amount because it will not have a significant impact on your business. – The type of coverage. There are two types of coverage for operational cash flow: (1) suppliers’ indemnity and (2) suppliers’ quota. Suppliers’ indemnity means that the credit insurance company will pay the amount due to your suppliers. Suppliers’ quota means that the credit insurance company will pay a percentage of the amount due to your suppliers.