While many of our articles focus on companies not using credit insurance, today I’d like to speak to the companies that are currently insuring their receivables. Whether it be Allianz (formally Euler Hermes), Coface, or Atradius, it’s good to know they are utilizing this safety mechanism to protect them from taking losses on their A/R. Increasing gas prices can create larger than normal exposures on your aging report. That said, as most traditional trade credit policies are priced on sales, not gallons, how are you protecting your company from large true-up premiums at policy end?
We’ve seen large true-ups due to policies priced on too high of a rate on sales or not carrying large enough buffers to adjust for these high prices. You may make the same profit per gallon but be charged on inflated sales, resulting in extra premium. What if there was another way?
Today, we are offering balance sheet protection devices that offer the following:
- Gallons based pricing instead of sales based. No more true-ups.
- Claims paid in 3-5 days from filing
- No costly credit limit fees
- 100% claims paid out (no co-insurance)
- Non-cancellable coverage
- Priced at or below current credit insurance pricing
While a micro-bond might not be right for every company, I’d encourage you to reach out to us and run the numbers. At the very least, we can review your current policy and see how it stacks up against your peers.