CREDIT INSURANCE What is it? Why do companies buy it? How is it - PowerPoint PPT Presentation

CREDIT INSURANCE • What is it? • Why do companies buy it? • How is it structured? • What does it cost?

WHAT IS CREDIT INSURANCE? • An insurance policy that guarantees your receivables • Originated and commonly used in Europe • Covers bankruptcies (formal or non- formal) • Covers slow pay, no pay, general non- payment

REASONS COMPANIES BUY • Sales Growth • Support Credit Function • Catastrophic Risk • Bank Financing • Reduce bad debt reserves and forecast losses • Get bigger limits from suppliers

EXAMPLES • Take away tool • Out of town contractors • Highway construction – needed higher limit from his supplier • Hurricane clean up crews • Make credit managers’ time more valuable • Emergency services

HOW IS CREDIT INSURANCE STRUCTURED? • Full Portfolio • Partial Portfolio • Single Account • Business Segments • Multi-term

WHAT DOES IT COST? • Typical policy ranges less than 1/3 of a penny per gallon or 1% of exposure • Can be paid upfront or quarterly • 1 truckload of 20,000 gallons = $60 • 100,000 gallons = $300

SUMMARY • Grow sales • Ease sales-credit tensions • Support your credit department • Avoid catastrophic and general losses • Reduce bad debt reserves and forecast losses • Borrow better

Cory Watson 817.715.5678 Cory.Watson@Leykell.com