Financial security to run your own business

When your customers buy stuff from you or purchase services on credit, they are in effect taking out a loan with you. In that case, they must meet their financial obligations and pay their invoices within a certain time frame. However, it may happen that your customer ends up in a situation where he can no longer pay the invoices, for example, when he goes bankrupt. To prevent this from causing problems for your company itself, you can take out credit insurance. Credit insurance is also sometimes called debtor's insurance. Credit insurance ensures that you are insured in case of non-paying debtors.

Credit insurance is a business insurance policy. That means it can be taken out by businesses and organizations. It does not matter whether it is a large company or an SME or small business: credit insurance can be applicable to many different industries and organizations. In certain industries, credit insurance can be an important insurance because, for example, they deal with special issues and the associated risks. However, credit insurance is taken out in a wide variety of industries.

So if you have a business where customers can buy goods or services on account, you are actually giving them a loan. As a business owner, you know that there is always the chance that a customer will at some point be unable to pay their invoices, for example due to financial problems or bankruptcy. You probably estimate this chance yourself in advance by checking the customer's creditworthiness, but not everything can be predicted. Even a large customer can run into financial problems at some point. Without credit insurance, this can have major consequences for your own business.

Credit insurance is sometimes called accounts receivable insurance. This is because it is a supporting component in debtor management. With credit insurance, you have more assurance that your invoices will be paid, even if it turns out that one of your larger debtors can no longer pay the outstanding invoices. After all, the market keeps changing, so even large customers can find themselves in difficult situations. As a business owner, you want to protect your organization as much as possible against financial problems. Therefore, credit insurance contributes to the financial health of your business.

Credit insurance compensates your company for the losses incurred when one of your customers can no longer pay their invoices. Often this is because the customer has financial problems or is even bankrupt. This can have a big impact on your own finances, especially if it is a large customer. By taking out credit insurance, you have the security of payment and do not have to worry about your own organization. The insurer reimburses (part of) the invoices if your customer can no longer pay them.

The premium for credit insurance depends on a number of factors. Among other things, the insurer looks at your turnover, the countries in which you do business, the type of customers you do business with, the quality of your accounts receivable management and your payment terms. Based on these factors, the premium for your credit insurance is calculated. Often the premium for credit insurance is between 0.1% and 0.5% of your turnover.