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If you own your own business, it is nice to have financial security. After all, when customers can't pay your invoices it can have major financial consequences for you as a business owner. Usually, the amounts involved are also substantial. What should you do if your customer cannot pay the bill or even goes bankrupt? To be insured against this, you can take out credit insurance. With credit insurance, you have the guarantee of payment even if your customer cannot pay the bill. This way, despite financial setbacks, you can continue with your daily business as usual and not risk a loss.
What is credit insurance?
Credit insurance ensures that you are protected if a customer can no longer pay their invoices. With credit insurance, the insurer will compensate you for the damage your company incurs if a customer can no longer pay his invoices, for example because he is bankrupt or has financial problems. So with credit insurance, you have extra financial security.
When to purchase credit insurance?
Do you have a business where customers can buy goods or services on account? Then you always run the risk that at some point a customer may no longer be able to pay the invoices. Credit insurance can provide financial security. Without credit insurance, you will probably have to pay the costs yourself. Companies that work with credit are found in many different sectors. Credit insurance is therefore taken out in many different industries, for both large and small companies.
What does credit insurance cost?
The cost of credit insurance depends on a number of factors:
- Your turnover
- The countries in which you do business
- The type of customers you do business with
- The quality of your accounts receivable management
- Your payment terms
Often the premium for credit insurance is between 0.1% and 0.5% of your turnover.
Credit insurance meaning
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 individuals
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.
Credit insurance loan
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 accounts receivable
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 explanation
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.
Credit insurance premium
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.
Get instant credit insurance through Alpina!
Through Alpina, you can easily take out credit insurance for your business. Do you have any questions during the closing process? Then don't hesitate to contact us! Our insurance specialists are happy to think along with you and can answer all your questions. You can reach us Monday to Friday from 8 a.m. to 6 p.m. by phone at 0800 - 688 37 12. You can also send us a message via chat, WhatsApp or Messenger.
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