Insurance of the whole turnover
Insurance of the whole turnover
Insurance of the whole turnover is a service that we strongly recommend to all companies doing business in domestic market and/or abroad. It is the most common form of credit insurance.
In this section you will learn about:
· What are the benefits of insurance of the whole turnover
· How do we protect the whole sale or part of it
· Which risks are included in the insurance policy
· How to calculate the credit limit?
· When and how to claim your insurance indemnity
· How to conclude an insurance policy in only 3 steps
The advantages your company gains by insuring the whole turnover
Insurance of the whole turnover is an important decision that provides the company with many advantages:
· a stronger competitive advantage with safer and more flexible operations on an open account,
· faster acquisition of new customers, since you do not need to require bank guarantees or other insurances,
· a biggest risks arising from business activities on an open account with domestic or international customers will be covered,
· greater risk diversification and lower risk of financial loss,
· insurance of an important part of the assets, which on average represents as much as 40% of the total assets of the company,
· acquisition of your customer’s credit rating and its constant monitoring,
· lower costs of insurance premiums,
· professional assistance, which includes information on the specifics of the operations of various sectors, countries, legal advice, assistance in solving payment problems and the optimal choice of the of collection,
· adjusting the amount of credit limits according to your business,
· transparent credit management using the PKZ-Net web application.
How do we protect the whole turnover or part of it
With the conclusion of an insurance policy for the whole turnover you insure all receivables on domestic and / or foreign markets with a payment period of up to 180 days. In this way, you insure the entire sale of goods or services on an open account. Depending on the nature of your business, we can also insure only part of the sales (eg, only export or domestic sales only).
You pay a monthly insurance premium. The amount of the insurance premium depends on several different factors and is accounted for in per mille from sales realized to insured customers.
We have you covered as soon as we sign the insurance policy; all you need to do is to make sure that:
· you act responsibly and cost-effective in order to minimize your loss and chances for loss occurrence,
· you submit your documentation on time via the practical PKZ-Net application,
· every month, you notify us about the turnover and any delays in payments,
· you remind defaulted obligors of their due payments and immediately inform us should the reminders bring no result.
Coface PKZ takes care of everything else.
Risks which are included in the insurance policy
With the insurance of the whole turnover, you protect your business against commercial risks arising from the sale on an open account. You will foremost be protected against loss arising due to your customers’ bankruptcy, compulsory settlement, protracted delays in payments and other reasons causing them to not settle their liabilities.
In case if you conduct business on markets exposed to political (wars, riots, transfer bans etc.), not only commercial risks, you can also insure your transactions against loss events as a result of political risks.
An insurance policy can additionally also include potential risks arising before the supply of goods. This means that your company is insured if insolvency occurs during the production of customized goods made for a special purpose, which means that such goods cannot be sold to another buyer.
How to calculate the credit limit?
The credit limit is the amount of outstanding receivables, to which we guarantee the repayment of loss that would arise in the event of a loss event.
You can fill out a request for a credit limit, by which you request a cover for a certain amount of money. We carefully examine the form and take into account all the factors to effectively assess the amount of the credit limit. If we consider it a very risky case, we can advise additional insurance instruments.
In most cases, we cover up to 90% of the approved limit, while the rest is the own share of the insured. This is the proportion of damage that you cover upon each loss. The amount of your own share depends on the type of limit, which we will be happy to discuss with you.
The amount of credit limit is constantly adjusted to the trend of your sales, if other factors affecting the business are allowed.
To calculate the credit limit, we use the formula, which is further illustrated by a practical example:
(Annual sales to the buyer / 12 months) * actual payment period = CREDIT LIMIT
Estimated monthly turnover with the buyer:
Normal payment delay:
Calculation of the usual credit limit:
€ 50.000 * 2 (45 + 15 days or 2 months) = € 100.000
Note: if the monthly turnover is anticipated under seasonal effects, we consider the month with the highest turnover.
You will receive your indemnification in the shortest time possible
In the case of a loss event that is specified in the insurance policy, your company is entitled to compensation for loss, respectively insurance indemnity. A loss event occurs immediately after your customer becomes insolvent or, in the case of protracted default, six months after the due date of the first outstanding invoice.
As a guideline, the level of repayment usually amounts up to 90% of the loss, costs of recovery and legal expenses. You will receive your compensation within 30 days after you have submitted your indemnity claim receipt. In practice, this period is often shorter.
The payment you receive after the loss compensation has been paid out is shared in the ratio of the loss participation in the loss event (90:10; 85: 15).
Insure your receivables in only 3 steps and start doing better business
1. In order to obtain more information on your business, we ask you to complete the Questionnaire.
2. You will then receive a customized offer in the shortest time possible.
3. You sign the policy.