Speaker

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SURVIVAL GUIDE TO RECESSION OR ECONOMIC DOWNTURN
Speaker Steve Sadler FCII Director Rees Astley
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Should I insure against non payment of invoices?

• FACTS Did you know that
• 5 of UK businesses fail due to bad debt?
• On average, debtors make up 40 of a
  companys current assets and are almost always
  uninsured?
• 63 of businesses never check their customers
  creditworthiness and that
• 25 never even confirm their terms of business
  in writing?
• 68 of businesses have experienced customer
  insolvency?
• 25 of business failures come from customers with
  previously good payment records?
• British businesses spend over 12 billion a year
  on credit management and chasing their debts?
• Every pound lost in bad debt, or spent in trying
  to recover it, adds thousands to your costs and
  could even delay your retirement?

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If your business was to go bust, would you

• Lose your job?
• Have to sell your house to pay the business'
  debts?
• Be forced into personal bankruptcy?
• Be disqualified as a director due to your own
  inaction?
• Find yourself facing fines or even imprisonment?

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CREDIT INSURANCE
What is covered?

• Buyer risks - Losses due to insolvency or
  protracted default
• Political risks (for certain export markets)
  Losses arising from moratoriums on payment,
  exchange transfer delays, frustration of the
  contract due to acts of a foreign government,
  public buyer default or force majeure termination
  of the contract

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What is excluded?

• Disputed amounts
• Contractual failure by the Insured
• Sales to associate and/or subsidiary companies
• Cash sales and VAT
• Sales to customers declined by the Insurer
• Goods sold or services provided beyond the
  Maximum Extension Period
• Failure to obtain an import or export licence

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Other facts to be aware of

• Premium - Typically a fixed amount paid in
  monthly or quarterly instalments
• Credit Limits - must be established on every
  customer
• Insured Percentage - typically 90
• Excess typically 1,000
• Notification - the account remains outstanding
  beyond the Maximum Extension Period
• Claims - Typically insurers will pay a claim
  in respect of Insolvency within 30 days
  of receipt of the fully completed claim, or
  for Default within 3 months of the date of
  default, or receipt of the fully completed claim,
  whichever is the later

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CREDIT INSURANCEHow it helps you grow your
business

• Assess the buyer - identify good or bad customers
  
• This allows you to focus your sales efforts on
  customers that can pay!
• Debt collection reduced or removed
• Preventative credit checking and the collection
  services provided by insurers reduce this burden
• Cover - protect cash flow and balance sheet
• Credit Insurance does both
• Collateral - improve borrowing
• A secured asset is more valuable than an
  unsecured one. Covering against the risk of bad
  debt makes the business more attractive to banks
  and financiers