Credit insurance is essential for companies wishing to limit the risk of non-payment or late payment. But what exactly does it consist of, what are the services offered by Coface and what are the threats weighing on the solvency of companies? Here are some answers.
What is credit insurance?
Resort to a credit insurance, it is to guarantee to its company to develop with profitability in the long term. This is to ensure the monitoring of business partners, including customers, to ensure their solvency. In other words, it’s the way to make financially sound decisions and to be sure that the customer will pay his bill on time.
Services and products can be delivered with more peace of mind, without fear of non-payment or late payment.
In addition, companies benefiting from this financial guarantee are also covered and compensated in the event of debts not honored by their business partners. And this, whether it is an activity within France or for export. The company is therefore protected at all levels.
What are the risks to which companies are exposed?
Dealing with a late payment or bad debt is one of the biggest problems for small businesses and SMEs.
Indeed, these non-payments sometimes weigh heavily on a company’s budget, often forcing managers to dig into their own funds in order to continue to support their activity and buffer the recovery time. In concrete terms, this is the main statistical cause of business failures.
This is an even greater risk for companies whose turnover is mainly made up of a major customer. The viability of their business depends on its financial health and solvency. Some companies find themselves forced to go out of business due to this type of situation.
Even when unpaid are not the source of bankruptcy or bankruptcy, they remain very disabling for the company that bears the cost. Indeed, weighing heavily on solvency, the delay in payment forces the organization to make up the deficits and therefore to increase its turnover.
It is in this context that credit insurance appears to be a reliable solution. It makes it possible to ensure the solvency of business partners and to take recovery measures in the event of a problem.
How does this solvency guarantee work?
The credit insurance offered by Coface makes it possible to insure sales, cover risks in a personalized manner, finance the development of the activity and estimate the value of markets. Coface provides companies with a network of experts around the world, able to verify the financial health of suppliers or potential customers.
The risks of late payment are already significant in France, but they are even more so for companies that decide to export outside the borders of France. Many criteria must be taken into account, in particular the social, economic and political situation and of the countries concerned. Thanks to credit insurance, decision-makers have a good knowledge of local conditions:
- You only sell your services or products to the right payers.
- You know in real time their financial health and the economic situation of their country.
- You collect your debts with tact and negotiation to continue to maintain good commercial relations.
- In the event of a problem, you are guaranteed to receive compensation for your unpaid invoices.
All companies without exception, whatever their size, are affected by the solution offered by Coface.