Credit Insurance

In return for your premium you have access to the following benefits:

• Consistency of credit control management across your business. If you operate through multiple sites then you will want to ensure a consistent process is adopted by all in this area.
• Consistent, individual credit limit assessment for each customer with whom you trade. The decision-making process when setting credit limits can time-consuming and stressful when under pressure to obtain sales but is reduced with an independent view from an underwriter.
• Continued monitoring of your customers, advising both positive and negative changes in your customers’ risk grade and profile. This allows you to focus sales efforts towards supplying credit-worthy customers that will pay and reduce or stop supplies to weak customers, who may not.
• Professional, worldwide debt collection and litigation services at your disposal for seriously overdue debts, often without cost. This allows you to focus on more positive aspects of your business.

• Insure all your customers (Whole Turnover), a selection (Key Account) or one customer (Single Risk).
• Cover for goods and/or services.
• All trade sectors can be covered.
• Claims are triggered by Insolvency or serious Default by a customer or as a result of a political situation.
• 90% of the loss will be paid to you subject to a credit limit being in place.
• You must establish a credit limit for each customer by applying to the underwriter or using your limit of discretion.
• Excess typically ranges from £500 to £1,000.
• Policies contain a mutually agreed stop date when services or deliveries should be suspended.
• A limit of discretion allows you to set credit limits at lower levels, typically £10,000 or less but subject to justification such as good trading history or a credit reference report.
• Policies can be written with cancellable or non-cancellable credit limits.
• Fixed or variable premiums.
• On-line system helps you operate the entire policy management process, from initial credit limit application to claims.

If you are involved with the Construction Trade then you may be familiar with the above term or even had to obtain one.

A Performance Bond is a guarantee given by an underwriter to a Contractor on behalf of a sub-contractor. The underwriter guarantees to pay a sum of money (usually 10% of the contract value) to the Contractor in the event that the sub-contractor becomes insolvent during the the contract works period and is therefore unable to complete the work for which they were originally employed.

A sub-contractor may be able to obtain a bond or guarantee from their  own bank. However, to do so may tie up the very valuable working capital necessary for successful completion of the works.

Underwriters will require a fully completed proposal form, the bond wording (if provided by the Contractor, otherwise a standard ABI wording will be used) and a sight of full, up-to-date financial information such as annual and/or management accounts. They may also require directors’ guarantees and, should group companies be involved, cross counter indemnities. There may also be other case-specific conditions imposed or with which to comply.

Many underwriters are prepared to put a bond facility in place for a sub-contractor to make the underwriting process more simple each time a bond is required. This is essentially a line of credit which can be accessed when required and without the need to gather vast amounts of information each time the sub-contractor needs a bond. The sub-contractor keeps the underwriter furnished with management and other accounting information on a regular basis together with bond details such as certificates of practical completion. In return, they have a line of credit already in place to use as and when required.