What is credit insurance?

Credit Insurance Questions

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Your credit insurance questions answered

The more you know about Coface Credit Insurance, the more sense it makes. So here are quick answers to some of the questions we are asked most frequently. Need more detailed information? Got a different question? Ask us anything, and feel free to contact us at any time.

What is credit insurance?

Credit insurance is a type of business insurance which covers losses arising from non-payment for goods or services.

It means that should the worst happen – a customer’s insolvency or protracted default – the policyholder can protect their bottom line and maintain their cashflow. See our 15 page guide to credit insurance, discover how it works, what to consider when obtaining a policy for your business plus lots more.

What determines the cost?

The price of  Credit Insurance is set according to your turnover and your business profile – including industry sector, number of customers and your previous loss history.

Can you cover all my domestic and international customers?

All your domestic and export customers can be covered unless there are any exceptions e.g. if the customer is associated with your company or a government-owned company or if there is a strong risk of a bad debt.

Can I just insure my foreign receivables?

Policies can only cover your overseas accounts. Not only will they be covered for payment default or bankruptcy but you can also add cover for political risk as well.

Why should I pay to cover my entire turnover, I only need a few customers protected?

You can cover as many or as few customers as you like. Contact us or let us call you back and we’ll help you find the most suitable, low cost high value option.

What if you won’t cover one of my customers?

If we’re unable to grant cover that means that the information we hold indicates a strong risk of a bad debt and that we don’t recommend using open credit terms. However, if you do decide to trade and experience slow payment or a bad debt, you can submit the case to us and we can collect your debt.

Can I seek your advice on newly prospected markets?

We provide free analyses on country risk and the business environment for 160 countries. Drawn up on the basis of macroeconomic, financial and political data. Regularly updated, they provide an estimate of the average credit risk on a country’s businesses. This is an invaluable tool, giving an indication of a country’s potential influence on businesses’ financial commitments.

We also assess 13 major sectors worldwide. These assessments are based on our 75 years of  expertise and on the financial data published by listed companies from six geographical sectors. Five financial indicators are taken into account: turnover, profitability, the net debt ratio, cashflow and claims observed by our risk managers.

Is an invoice covered if there’s dispute about it with a customer?

With Coface Credit Insurance your bad debt disputes are covered (according to policy terms and conditions)

How do I make a claim?

Claiming is straightforward and our dedicated client services team can guide you through the process. Once claims have been assessed and validated, they are paid within 30 days. There’s also an early claim payment option.

Is there a cost for arranging indemnity payment to my bank?

There is no cost to arrange this.  We simply add the information to your contract.

Should I tell my customers that I have credit insurance, or will you tell them?

You may decide to tell customers as a sign that overdue invoices will be chased actively and as proof of your sound business management. However, should we ever need to contact a company who happens to be one of your clients we will not tell them that you have insurance, unless we have your approval.

How can I pay for the insurance?

You can pay by direct debit on a monthly or quarterly basis, or simply pay the whole premium upfront.

How does credit insurance compare to other services?

Find out how credit insurance compares to other credit management strategies.

Do you provide specific cover for self-billing activities?

Businesses engaged in self-billing activities are exposed to specific risks, including the non-payment of invoices where the buyer themselves prepare VAT invoices on behalf of the VAT registered supplier. You can request this type of cover at no extra cost.

Do you provide specific cover for the advertising industry?

Businesses working in the advertising industry are exposed to specific risks, including the non-payment of invoices for the performing of services, and non-cancellable forward bookings for media or advertising space. You can request cover for these risks at no additional cost.

How come I’ve never heard of Credit Insurance?

Credit Insurance has actually been sold in Europe and the United States for many decades.

Is trade credit insurance only suitable for small businesses?

Many multinational and large UK based companies use Trade Credit policies to help mitigate risk as part of the corporate governance to protect their owners or shareholders.

My customers are reliable – why should I insure them?

Your customers might be reliable, you may have long standing relationships but do you know everything that is happening? They may have issues with their own customers or suppliers which could impact you. By the time you find out it can often be too late. Credit Insurance covers any failure however large or unexpected.

Do you monitor my customers?

We use our information services to constantly monitor your buyers. We will advise you when the financial situation deteriorates or perhaps if there are any judgements or other claims against the buyer. We work alongside you to develop your buyer limits.

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