RECEIVING TRADE CREDITS FROM CREDIT INSURANCE COMPANIES BY SUPPLYING FINANCIAL STATEMENTS TO PUBLIC...
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Transcript of RECEIVING TRADE CREDITS FROM CREDIT INSURANCE COMPANIES BY SUPPLYING FINANCIAL STATEMENTS TO PUBLIC...
RECEIVING TRADE CREDITS FROM
CREDIT INSURANCE COMPANIES BY SUPPLYING
FINANCIAL STATEMENTS TO PUBLIC REGISTERS
What is the business of a credit insurance company?
insurance against insolvency of commercial receivables
insurance against non-payment
provides credit risk management to its customers
provides trade credit to the suppliers of their customers (policyholders)
2
IndemnificationLoss
minimisation
Loss avoidance
Insurancecover
Core functions of credit-insurers
Credit insurers gather information from local sources like:
Banks Information agencies Trade registers Visits to the buyers Suppliers: payment behaviour
Risk assesment
Core functions of credit-insurers
How does that work?
CREDIT
DECISION
ESTABLISHING
OF
CREDIT LIMITS
MONITORINGRISK
ASSESSMENT
changes in address
changes in legal form/style
changes regarding the capital
changes regarding bank accounts
changes regarding the payment behaviour
update of financial information
debt collection orders
Monitoring
balance sheet data
profit & loss account
management report/notes
budgets
forecasts
quarterly reports
Financial Information
Trade registers:
Obligations to report and to register balance sheets are different from country to country
content of registered data is different
form:– paper– structured data– audited figures– unaudited figures– certificate of auditors
From where can you get this information?
Information agencies:
Gather information basically from trade registers and by telephone-interviews
Buyer:
Regularly buyer visits are important for understanding each others business and for having confidence in each other.
From where can you get this information?
It helps your creditors (banks or insurance companies) to grant trade credits to your company and to maximize the level of credit.
Your supplier will be able to enhance the business relationship to your company.
This may result for you in receiving more goods, better credit terms or additional discounts.
If you are presently trading on a “cash in advance” basis a credit limit from an insurance company may allow you to trade on credit terms.
Why is it so important to make financial statementspublicly and deliver them promptly to the trade registers?
It may mean that the credit insurer is not able to grant limits or is only able to grant limits in a small extent
It may mean that your supplier will ask you for payment in advance or payment within shorter terms.
What will happen if you don’t providefinancial information ?
A credit insurance policy insures the entire receivable portfolio of your vendor.
The benefit of an insurance policy is to insure against that catastrophic event that may put a business in jeopardy.
A credit insurance policy is a supplement to your suppliers’in-house credit management.
opens up opportunities for better financing
Lets your supplier confidently increase sales to new or existing buyers and allows him to reduce bad-debt reserves to free-up working capital.
All this makes your supplier a more dependable business partner.
Your company has good credit, why doesyour vendor need to insure you?
to get close to their clients’ customers
to understand their business and the market in which they operate
to take decisions on the most up-to-date relevant information
to build relationships to the buyers to have a better understanding of each other’s business
Philosophy of credit insurers
It will help you to maximize your trade credit volume with insurance companies
You will be known as a reliable partner and this will result in:
– Enhancing the business relationship with your suppliers
– Receiving more goods, better credit terms or additional discounts
– If you are presently trading on a “cash in advance” basis a credit limit from an insurance company may allow you to trade on credit terms
What are your benefits if you deliver yourfinancial data promptly to public registers?
about 300.000 companies
- 174.120 registered companies
- 1.475 joint stock companies
- 102.162 companies with limited liability
- non registered: ownerships or companies with unlimited liability
about 80.000 – 90.000 companies file their accountsin the trade register
Austria’s companies