Phillip Krinker

The best of two worlds: greater profit opportunity and improved safety with Credit Insurance

In the past few years, companies in Brazil have faced various cycles of losses from unreceived sales. It is worth remembering that in 2018 there was a record number of judicial recoveries, the largest number recorded in recent years. 

In this scenario, we need tools, which in addition to protecting the “accounts receivable” from such a loss cycle, also provide increased sales.  

One of such tools is Credit Insurance which, although in Brazil it is still in its early stages, has led many businessmen to perceive its importance.   

One doubt that often comes up is, “How much more does a company have to sell to offset an unpaid sales invoice?”  

Let’s see an example:  

A company, with a 10% profit margin, that sustains a loss of R$ 100,000.00, will have to sell 10 times more to cover the deficit

Credit Insurance can contribute to avoid losses such as these, because in the case of default, the insurer covers approximately 90% of the value.

Today, we will delve a little deeper into two of the most important benefits derived from Credit Insurance:

  1. Increased Sales

By sharing the credit risk with an insurer, it becomes much more feasible to increase sales with existing clients and win new markets.    

With credit insurance, it is possible to obtain approval for credit limits, and also to entrust the monitoring of your clients or prospects to the insurer, in order to enter new markets, either regionally or with new product lines or services.  The insurer has an excellent databank and can be a very important partner to increase your company’s sales.

  1. Protection for capital

A company’s receivables account, on average, corresponds to 40% of its total assets.  A late payment represents a capital cost, and the situation can be aggravated in an economic crisis scenario.

With its cash flow protected by Credit Insurance, your company is assured that the capital invested in accounts receivable will be safe and will return to the company, even if your client defaults on its assumed obligations.      

In brief: To sell more, using the intelligence and structure of a specialist insurer will give you the confidence to expand your sales and guarantee your company’s profitability. 

In this new stage of the economy, it is worthwhile to determine if  the cost of acquiring Credit Insurance fits into your company’s cost structure, in order to guarantee growth with safety and profitability.

If your company has sustained an unexpected loss or if you would merely like to estimate the additional sales value required to offset the profit lost in the case of default, CredRisk Insurances makes available to you a Profit Recovery Simulator for such calculation:  Enter Simulator!