Phillip Krinker

What are the benefits of Credit Insurance?

14th May 2018 Phillip Krinker 0 Comments

In today’s market, your company needs to extend credit to customers, in order to maintain its competitivity. However, every time you extend credit to a customer, there is the risk of the debt not being paid. Such creates risks for the company’s cash flow and profitability.    

Therefore, it is important to consider the placement of Credit Insurance. It helps to improve the management of your credit risk, and besides it is a good Corporate Governance practice.

 

The main benefits of Credit Insurance are:

– To protect your company’s cash flow against the impact of defaulted receivables, even in the event of an economic downturn;      

– To enable your company to make credit sales, without adding excessive risk to the company’s balance sheet;    

– To permit the expansion of sales to existing customers and the exploration of new markets on a safer basis;    

– To help fund your business, and to serve as an additional tool for a receivables financing program with more attractive rates;  

Credit Insurers have vast databanks of up-to-date financial information on companies, and their payment behavior in the market, as well as economic and political information on the countries that buy their products and/or services;     

– It is the Credit Insurer, not your company, that sustains loss if the credit recommendation is incorrect.

– Furthermore, the insurers offer assistance for debt collection, in Brazil and abroad;   

In addition to the foregoing benefits, the companies that opt for the actual profit taxation method, include in the Income Tax calculation base the premium paid for this insurance, as a deductible expense.

CredRisk Seguros, as an independent broker, can help your company to evaluate the best option to minimize your organization’s credit exposure, whilst observing your risk management and insurance policy. Request a quotation!