With late payments and insolvencies on the rise, every business needs to be on their guard to avoid the financial shock of a bad debt.
Having a Credit Insurance policy shows that your company is serious about credit risk. Coface is here to support you, from helping you identify higher-risk business partners to protecting your cash flow if the worst happens. If you do need to make a claim due to insolvency, once assessed and validated, you can expect to receive the money in as little as 30 days from the notification of insolvency. If you make a claim due to a late payment, it will be 30 days from the expiration of the waiting period.
To support your claim, we need all our policyholders to play their part by reporting late payments and other relevant information within the timeframes set out in their contract and responding promptly to requests for information. Failure to do this might jeopardise your position if the buyer defaults or fails.
What should I notify?
Your contract will set out what you need to report and the required timeframes. Remember, all timeframes are inclusive of bank holidays and weekends. Your reporting requirements typically include:
- An overdue account (a buyer who has failed to pay on time) should be reported within the time limit for notification stated in your contract.
- When you become aware of adverse information concerning a buyer that indicates they may not be able to pay, for example, the insolvency of the buyer or an associated company, cash flow difficulties, reputation deterioration, or legal action taken against them, adverse information should be reported no later than 10 days after you become aware of the information.
- Existing Binding orders and pre-shipment risks are in place when Coface has reduced or cancelled a buyer’s credit limit. These should be reported within the notification period specified in your contract.
- When there is a disputed debt on an outstanding account worth 10% or more of the total debt value or more than £10,000.
What if I want to give a buyer more time?
Perhaps a company you’ve been trading with for years is experiencing short-term cash flow problems, but you have reason to believe they are acting in good faith and will pay. In this situation, you might decide it’s better for your long-term business relationship to come to an arrangement rather than enforce payment.
Coface provides you with the flexibility to agree on a payment plan with a buyer within your maximum credit period (MCP). If the payment plan exceeds the MCP, we ask you to notify us of an extension to the due date.
How do I notify you?
You will need to notify us through CofaNet, your policy management tool. For example, to notify us about an overdue account, click on the buyer’s name in your portfolio to go to the buyer’s company detail page. Then select “Notification of overdue account” from the select action box.
You can download a CofaNet starter guide from our download centre under the additional services tab. This includes a step-by-step guide to the basic functions, including notifying an overdue account and requesting an extension of the due date. If you need help, you can call our client services team on 01923 478 157.
If you already have an effective credit management process in place, then identifying notifiable issues and informing us within the required time should be straightforward, which means you’ll have met your contractual obligations.
Plus, the more relevant, timely, and accurate information that Coface receives about companies’ payment behaviour, the better placed we are to assess their default risk. That has to be in the interests of all our clients who rely on us to make informed credit decisions, set realistic credit limits, and provide accurate business intelligence.
Head of SME & Mid-Market Account Management