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Few companies can compete effectively today without running credit risks. Financial loss from insolvency or default and, in overseas business, from political events and delays in payment in hard currency as well, can threaten a company's cash flow – and even its share capital. Bankruptcy as a business strategy, civil unrest, & natural disasters are all risks that can make even the most reliable customer unable to pay, no matter how solid their past payment history or how good a company’s initial credit decision.
Marsh is the world’s leading risk and insurance services firm, provides the total range of expertise in today’s global economy.
Trade Credit Insurance
The risks involved can be placed into the following two categories-
Commercial Risks: Payment risk related to the buyer itself. This encompasses non payment by your buyers due to:
- Insolvency
The risk of loss due to insolvency of a private buyer, e.g. Bankruptcy
- Protracted Default
The risk of loss is due to non-payment within a specified period of time after the due date, for any commercial reason other than insolvency.
Political Risks: Payment risk is related to the country of the buyer, ex. War, Civil war, Currency inconvertibility etc.
The Key benefits of Credit Insurance can be summarized as follows:
- Cover against unforeseen bad debts
- Accurate budgeting for bad debts
- Reinforcement of credit control disciplines
- Avoiding the risks in new markets
- Access to trade finance with finer rates of interest
- Manage your trade credit via professional assistance
Trade Credit Insurance in New Markets
Have you prepared for extending your business in new markets such as China, India, Brazil…etc. Marsh meets the global needs through a wholly owned broad network.
Factoring
Do you need to transfer the risk of account receivable and need cash from sales as well? Marsh enjoys an excellent relationship with banks, and is able to give you the best suggestion.
Assessment service
How to get the most trustworthy information for your buyer with the most valuable expense? Marsh knows the way.
Collection Services
If your company has a slow –paying customer, Marsh would help you with the most extensive worldwide offices in collection through the best local collection agencies.
Credit Risks Consultancy
Want to raise the assessment ability of your company? The consultancy which partnered with Marsh will aim in your industry and provide a perfect assessment module for you.
FAQ's
What is the difference to arrange Credit insurance through Marsh and arrange by ourselves?
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Through Marsh |
By yourself |
Position |
Marsh always stands with our clients for clients’ best profits. |
Insurance companies always protect their own profits. |
Design the policy structure |
Marsh will consider all solutions and suggest the most suitable for our clients. |
No this service. |
Bargaining for the best terms & conditions |
Marsh is proud of our great bargaining power and always presents the best price, terms and conditions to our clients. |
It is hard to get the best terms in dealing with insurance company by yourself |
Application for credit limit |
Marsh will apply credit limit for you. |
Apply by yourself. |
Daily administration |
Marsh will arrange buyers list and manage certificates and other daily routines for you. |
Done everything by yourself. |
Claim handling |
Marsh has excellent professional claims experience which can help our clients to deal with insurance company and get the best result. |
Deal with insurance by yourself. |
Other credit issues |
Marsh has huge sources to find out the ways that our clients need. |
Settle by yourself. |
Expense |
No additional cost for Marsh’s services except insurance premium and/or buyers checking fee. |
No other expenses except insurance premium and/or buyers checking fee |
How much will it cost?
Average premium rate usually costs a fraction of 0.2%~0.4% or less of insurable turnover and is based on the type of business, annual sales, and loss experience of the insured.
How can credit insurance work as a financial tool?
Lenders recognize that the insolvency of a company's key customer may jeopardize repayment of a loan. Credit insurance reduces this risk and may result in more favorable lending terms.
How does credit insurance work as a sales product?
Credit insurance may enable companies to sell more goods on credit terms while substantially reducing the overall risk of exposure to nonpayment. It may also enable a business to take advantage of peak and cyclical selling periods and to safely expand into new product lines or territories.
How does credit insurance work as an insurance product?
Generally, it is recognized that 20% of a firm's buyers account for 80% of sales. Credit insurance protects against the catastrophic loss resulting from the insolvency of one or more of those key accounts.
Must all buyers be insured?
No! The policy is flexible and can be tailored to fit specific needs. It can cover an entire portfolio or only the largest, key accounts...those that would create a catastrophic loss if they became insolvent. The client makes the decision.
Who should purchase Credit Insurance?
Corporations who fit a certain profile will need Credit Insurance. This profile consists of corporations that:
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Have sales growth concentrated in a few, large accounts and are concerned about high credit balance exposure.
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Are growing at a rapid rate and are concerned about the effect of an untimely debt bankruptcy on profitability.
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Are involved in export sales and are concerned about countries that offer few credit guidelines.
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Are concerned about the effect that a large loss would have on their balance sheet.
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Have too many buyers to control properly.
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