MKP Credit Insurance protects your business in the event that a customer is unable to pay for goods or services rendered. By transferring the risk of non-payment to an insurer, MKP Credit Insurance safeguards your cash flows while giving you the confidence to pursue new opportunities.
When you sell your goods or services on credit to a customer, you place yourself at risk of non-payment. MKP Credit Insurance provides cover for your receivables in the event of buyer default. For many companies, a traditional Whole of Turnover policy is best, however, our solutions can be tailored to suit your business’s specific needs. These include insuring key accounts or key contracts; targeted cover of major buyers above a certain dollar threshold; or replacing an existing bad debt reserve with an aggregate first loss policy or insuring a single account.
- Whole of Turnover (many variables)
- Single Buyer
- Major debtor
- Exclusion of ‘blue chip’ buyers
- Catastrophe cover
- Top up cover
- Supplier default / advance payment protection
- Export - including political risk (contract frustration, currency inconvertibility, moratorium, public buyer default)
Income Protection: risk of customer non-payment is transferred to the insurer.
Increase Sales: extend larger credit limits, offer more favourable trading terms and alleviate buyer concentration risk issues.
Enter New Markets: protect customer payments as you expand into new markets and be confident of dealing on open credit terms.
Improve Credit Management: get greater access to information about your potential debtors and the tools to get paid faster by defaulting clients.
Improve access to finance from financial institutions that can be named on the policy as a loss payee. A policy may also help reduce financing costs.
Strengthen balance sheets by placing your bad debt provision with a credit insurance policy and inject funds back into the business as working capital. The credit insurance premium is tax deductible. Funds are placed back into the business through a claim payment, rather than taking out unrecoverable money from a bad debt provision.
Recover pre-insolvency and post-insolvency costs, including costs associated with collecting an overdue debt and the ability to protect yourself against a preference claim which can occur up to 3 years from time of insolvency.
Save time and money by outsourcing certain credit management functions to the insurer, including covering the hard costs of collection and legal fees when chasing an overdue debt.
Credit Insurance is principally used to protect businesses in the event that a customer is unable to pay for goods or services rendered. With the right policy, however, it can offer your business so much more than securing cash flows.
It is important that credit insurance policies are tailored to each company’s individual credit risk profile. We pride ourselves on our knowledge of the markets in which we operate, and recognize that no two businesses are alike in regards to credit risks.
As the below Case Studies demonstrate, by understanding our clients’ unique situations we were able to transfer the risk of customer non-payment to an insurer, thereby safeguarding their cash flows while giving them the confidence to pursue new opportunities.
A large company specialising in air-conditioning had explored credit insurance for several years and found the premium too expensive, especially as they had never suffered a loss.
We were engaged by the client to explore credit insurance once again and obtained premiums similar to the quotes of previous years.
The Opportunity
Gaining a full understanding of how the business operated and their credit management processes, we discovered the reason. they had never suffered a loss. While they had managed their credit well, they had employed extremely strict credit guidelines.
Knowing the industry sector, we uncovered that the business could not win major project work due to their strict credit guidelines and were missing out on a large number of sales.
Discussions with the sales team found they could increase revenue by a minimum of 10% if credit guidelines allowed them to take on larger exposures and projects.
The Outcome
The implementation of a credit insurance policy provided the company the confidence to take on larger exposures. The cost of the credit insurance became insignificant due to the large growth of the business.
After a review of the policy at 6 months, the client was amazed at how much more credit the insurers would approve on buyers compared to what they would traditionally approve.
A food distributor with an annual turnover of $15M had recently suffered their first loss totalling $20,000.
Credit Insurance premiums were quoted for $40,000+ and our client believed that credit insurance was not cost effective for their business. Furthermore, there was no concentration of risk through larger exposures against which they needed to protect themselves, and so no threat of a single catastrophic bad debt.
The Opportunity
We discovered that many of the companies our client was supplying were private companies with very little available financial information.
Many of their debtors would always pay late and our client was spending significant resources on collections: up to $5,000 a month. It was also noted most of the accounts were between $0-$5,000.
The Outcome
The implementation of a credit insurance policy provided the company the confidence to take on larger exposures. The cost of the credit insurance became insignificant due to the large growth of the business.
After a review of the policy at 6 months, the client was amazed at how much more credit the insurers would approve on buyers compared to what they would traditionally approve.
With Coronavirus insolvency protections and government stimulus measures for businesses beginning to be wound back over the coming months, MKP Credit Insurance offers an invaluable safeguard to your cash flows while giving you the confidence to pursue new opportunities. Don’t just be COVID Safe, be COVID Secure.
Already hold a Credit Insurance policy with another provider? Have it reviewed by a specialist to see if your existing policy is tailored to your business’s specific needs.
MKP Credit Insurance is powered by Prasidium. With over 60 years of combined credit insurance experience, Prasidium are the industry specialists. They take pride in their knowledge of the markets in which they operate, and recognize that no two businesses are alike in regards to credit risks. As such, Prasidium believes a credit insurance policy must be tailored to each company’s individual credit risk profile. Prasidium focuses on understanding a business's needs and saving them money.
The information provided here is general advice only and has been prepared without taking into account your objectives, financial situation or needs. Credit Insurance is provided by Prasidium Credit Insurance ACN 60 267 8820 AFSL 511640.
Moody Kiddell & Partners (Insurance) Pty Limited ABN 48 071 572 828 AFSL 512898
