Despite increased risk, only 5-10% of U.S. companies are taking advantage of this proven safeguard against problem customers.
Credit insurance, usually offered by private insurance companies and governmental export credit agencies, is set up to protect businesses from clients who default.
Now’s a great time for companies to arm themselves with this protection — if they offer B2B services and do at least $1 million in sales annually.
Here are three incentives to purchasing credit insurance now:
- Cheaper premiums. Advances in underwriting have resulted in a huge decrease in premium prices — although sizable losses in ’07-’08 have levelled things out some.
- Flexibility. Firms can create coverage plans that offer as much — or as little — protection as they need, from protection to specific customers or even single-buyer transactions.
- Safeguards for international business. Banks recommend insuring foreign receivables because the average DSO for international accounts is 75 days, compared to 40 days for domestic accounts.