Credit Insurance protects your company against the risk of default by corporate customers. In addition to bankruptcy and judicial recovery, the indemnification, up to 90% of the value of the open account, will be paid if the collection is unsuccessful. Insurers offer domestic (commercial risk) and export (commercial and political risk) Credit Insurance, approving credit terms of up to 180 days. Longer terms normally apply for capital goods and can be individually mitigated via a Capital Goods policy. The insurer, after having assessed the financial health of its customers, monitors its collection if the customer does not pay as negotiated.
Almost all companies at the time of closing the sale are forced to grant deadlines to their customers (PJ). Depending on the branch, these deadlines can reach up to 6 months. With this, the selling company runs the risk of not receiving. The company that opts for Credit Insurance has the insurance company as a partner to reduce and even eliminate the risk of default of its buyers. With a Credit Insurance policy, your company can grant terms from the first sale, gaining market share ahead of competitors.
Insurers have databases in which a large part of national and international companies are registered and are evaluated regarding their financial health. Before the first guaranteed sale, the insured company requests a credit limit from its insurer. In most cases it already has the limit approved immediately (online), or at least a partial approval. In some cases, based on the information in their database, the insurer refuses coverage. In cases of partial coverage or refusal, it clarifies the decision to the insured.
With approval, the insured can sell on installments with the security of being able to count on his receipts: If the buyer does not pay on the due date, the insured uses his collection methods. After a certain period, the insurance company assumes the charge.
If the insurer is unable to receive the total or partial amount, it pays the insured person the invoice amount, minus the deductible. If the buyer is declared bankrupt, the insurer immediately reimburses the insured.