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Credit Insurance explained

Thursday, February 3rd, 2011

It is widely believed that credit insurance can only be obtained on the back of a factoring or invoice discounting facility. This is not necessarily the case and it might be that you can obtain a better deal from an independent company. You may also wonder why one invoice finance company can insure one of your customers but not another. Hopefully this article will explain some of the misconceptions.

Any business can go to a specialist insurance company to obtain credit insurance. The broker will go to the various insurance companies and obtain a packaged policy from the best insurance company. There are a number of fundamental differences which may work in your favour.

Firstly credit insurance companies provided by the banks and the factoring and invoice discounting companies only kick in in the event of an insolvency situation. It is indeed possible to obtain credit insurance that kicks in in the event of a protracted claim. As far as we are aware we there is only one invoice discounting company that provides credit insurance in the event of a protracted dispute. Call me cynical but does anyone else think that factoring companies allow debtors to exceed 90 days so they can.

Secondly factoring and invoice discounting companies  charge against the gross ledger as opposed to the net ledger which is possible to do via the correct means.

Thirdly once a debt has exceed 60 days over the normal credit terms the insurance provider will chase the debt on your behalf provided. It doesn’t matter if if your factoring company is supposed to be doing it. two so to speak is better than one

It also possible to get credit insurance for export debt as well

You may also wonder why one factoring company can insure a debt another factoring company cannot..

 
 
 

XL Business Finance Ltd is a privately owned and independent business financing company with established links to many of the UK's leading finance houses. XL Business Finance provides a viable alternative to high street banks that lack the flexibility and imagination to provide a solution to most business users requirements. XL Business Finance can provide a full range of business financing solutions and we ensure a high level of customer service and pride ourselves on quick decisions. Our independent status will ensure any offer of funding and asset finance leasing is best suited to our customer’s needs.

XL Business Finance, Eaton Place Business Centre, 114 Washway Road, Sale, Cheshire M33 7RF UK.

 

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