Great! We had Trade Credit Insurance…will we get paid?
The moment your customer files bankruptcy protection, an automatic stay goes into effect. Having a trade credit policy to protect your accounts receivables is imperative for any business whether it’s small or big, domestic or international. However, just having a policy doesn’t always ensure, you will be paid 100%.
Let’s take a deeper look at some common scenarios when a trade credit policy does not pay and how you can properly manage your policy.
Debtor not listed on Policy – Business is hectic, sales are frantic and people are wearing multiple hats, but not having customer listed on policy isn’t going to allow carrier to underwrite.
What should you do…Create defined credit onboarding practice
Over shipped Permitted Limit – Sales is KING! Going above the assigned limits leaves partial unpaid exposure
What should you do…Review limits and AR biweekly/ monthly and input credit stops at assigned limits
Negotiated Longer Terms – Customers are pushing for extended terms but extending past agreed terms could be a reason for denial
What should you do…Input safeguards, hard fast rules of n30/n60 or n90
Missed a Claim Filing Window – Assuming you will get paid and kicking the can down the road could cause you to miss the claim filing window from the carrier.
What should you do…Reduce DSO and Increase collectability by taking action 60, 90 days past due
Didn’t Report Past Dues – Carriers want to know past due information to make more analytical decisions, but miss reporting could be a reason
What should you do…Review 1st of month, calendar reminders. No past dues – good news!
Someone once told me that all legitimate claims are paid! – A trade credit policy is a very viable tool for all business’s selling on credit. It is intricate for a business to understand how to manage and utilize the policy.
Robertson Ryan & Associates is a Top 50 Property and Casualty Agency that also specializes in Trade Credit, working with major carriers to provide our clients an understanding and software tools to ENSURE our clients do not miss the 5 common mistakes above.
Policy compliance is key and in the day of automation and we would appreciate the opportunity to help you understand how we can achieve that and eliminate the denials. If you have questions, or would like a better understanding of how to maximize your policy with minimizing the grey areas please contact me.