Imagine you are a vendor and a potential client inquires about a large purchase of the product you sell. A big sale opportunity is exciting because it could help you grow your business. But in the conversation, you learn that the customer does not have the cash upfront to pay for the products and they are looking to purchase on credit. If you’re unsure if the prospect is credit worthy, it’s in your best interest to have credit insurance coverage.
Companies that provide credit insurance coverage typically have a database of information that they use to set credit limits. They understand customer risk profiles and use this information to help policyholders.
Policyholders can ask for a credit check, also known as a limit application, on their customers. The insurer is going to look at perceived risk and then make determinations about the level of credit that should be extended. You may find that a particular customer is creditworthy, so you may choose to extend them a higher limit of credit.
Some insurers will also work to collect on debt if you are having trouble getting paid. They will collect debt on behalf of the policyholder after a certain amount of time has passed since becoming past due. In extreme cases, some insurers may even provide legal services to help aid in the collection of debt.
Learn what we are doing at the Trade Risk Group to help customers by visiting our website.