Global Commercial Credit Solutions for Accounts Receivable

Managing accounts receivable is a complex task, especially for businesses operating globally.

Companies can leverage commercial credit solutions to optimize cash flow and reduce bad debt.

In the United States, the average company spends around 10% of its annual revenue on bad debt.

A well-structured credit management system can help mitigate this risk and improve financial stability.

Businesses can use credit scoring models to assess the creditworthiness of their customers, making informed decisions about credit limits and payment terms.

For instance, a credit score of 600 or higher is generally considered good in the United States.

Having a strong non-cancelable trade credit program in place can give a business the certainty of coverage it needs to operate smoothly.

AIG's global resources can quickly bring together to understand a company's risk and provide the capacity to support credit extensions to third parties.

The pharma company received the credit protection it needed to efficiently distribute its test kits at a critical time, thanks to AIG's help.

Trade credit insurance can help improve cash flow by protecting against default, which is a key advantage for business owners.

AIG helped a client identify credit concerns in their portfolio and advised them to insure higher-risk customers at reduced indemnity, while increasing credit limits for lower-risk customers.

By modifying its program, the client was able to continue managing important customer relationships while managing risk.

There are various types of global commercial credit that businesses can choose from to suit their needs. Coface offers a comprehensive range of credit insurance solutions for every size of business and every type of industry.

A Whole Turnover Policy is a type of trade credit insurance that covers all buyers that meet the underwriter's criteria with a blanket limit up to the policy maximum. It provides flexibility and eases administration, making it especially useful for businesses that engage in wholesale or international trade.

The policy can provide a percentage of coverage for the entire balance sheet, up to a certain credit limit set by the policy. This is influenced by factors such as the size, track record, and location of the customers, as well as political events and risks.

Here's how a Trade Credit Insurance policy works: you provide information about your company and clients, and the insurance company assesses their financial health to draw up credit limits and commercial terms.

The insurance company monitors your clients around the clock and adjusts the coverage accordingly. This ensures that your business is protected from potential risks.

If a client doesn't pay in a timely manner, the debt collection services of the insurance company can help settle unpaid invoices. This can happen anywhere in the world.

Here's a step-by-step overview of the process:

A whole turnover policy is a type of credit insurance that covers all buyers that meet the underwriter's criteria with a blanket limit up to the policy maximum.

This policy provides flexibility and eases administration, making it a convenient option for businesses that engage in wholesale or international trade. It's especially useful for businesses that could face serious financial difficulties if any of their customers default or pay late.

A whole turnover policy can provide a percentage of coverage for the entire balance sheet, up to a certain credit limit set by the policy. The credit limit and the percentage of coverage are based on factors such as the size, track record, and location of the customers.

The premium for a whole turnover policy is influenced by factors such as the amount and frequency of invoices, as well as the percentage of accounts receivables. The higher the percentage of accounts receivables, the higher the premium will be.

This policy can apply to domestic and/or international sales, depending on the needs of the business.

The partial turnover policy is a great option for businesses with a diverse customer base. It allows you to select which buyers to cover based on their creditworthiness, payment history, and other factors.

This policy provides flexibility in terms of coverage percentage, deductible, and premium rate, making it a tailored solution for your business needs.

By choosing a partial turnover policy, you can enjoy lower premium costs compared to a full turnover policy. This can be a significant advantage for businesses looking to reduce their expenses.

The policy also reduces the administrative burden and enhances the management of cash flow, making it a practical choice for businesses that need to manage their finances carefully.

Single-Buyer Coverage is a type of policy that protects against losses from one identified high-risk or essential buyer. This policy insures an individual customer who poses a concern.

Single-buyer coverage is commonly used when dealing with a new buyer, especially if they have uncertain finances or past payment issues. It reduces the risk of a problematic account requiring special attention.

This type of policy allows you to cover customers who represent a large revenue share, making it ideal for businesses that rely heavily on a few key customers. Single-buyer coverage can help manage bad debt, improve terms of supply, streamline collections, and increase access to capital.

Here are some benefits of single-buyer coverage:

By having a single-buyer coverage policy in place, you can minimize the financial impact of a problematic account and focus on growing your business.

Businesses with many receivables and a few major customers can benefit from trade credit insurance. It covers a percentage of unpaid invoices, which can go a long way toward protecting against loss if those customers default.

Expert underwriters thoroughly assess each of your buyers, evaluating the financial health and creditworthiness of every customer, helping businesses make informed decisions about credit limits and terms to offer customers.

Trade credit insurance protects against exposures associated with specified domestic or global customers, including buyer insolvency, protracted default, or failure of the exchange authority in the buyer's country to transfer foreign currency.

In times of inflation or higher input costs, trade credit insurance helps ensure you get paid for sales you have already made and cover increased expenses, protecting your bottom line.

A key benefit of trade credit insurance is that it provides a cost-effective way to ensure steady cash flow and mitigate risks of non-payment by key customers.

Here are some ways trade credit insurance can help manage accounts receivable risk:

With over 100 million locations accepting commercial cards, you can use your credit card almost anywhere in the world.

A tailored suite of commercial cards from a reputable provider can evolve with your company's growth and changing needs.

Around-the-clock customer service and fraud protection can give you peace of mind and help you manage your finances more efficiently.

Insurance is a policy that protects companies against losses from non-payment by business customers. It covers both domestic sales and export sales to overseas buyers.

Trade credit insurance, in particular, allows businesses to safely extend credit terms to customers, which can help attract new business and increase sales. This is because the risk of a customer defaulting on payment is transferred to an insurance company.

The insurance company will pay claims on losses from insolvency, protracted default, or other covered causes. Companies pay a monthly premium to the trade credit insurer based on a percentage of their gross monthly sales.

The premium percentage rate can range from 0.05% to 0.6%, with 0.2% being a typical rate. While there is an upfront cost, the increased sales and revenues generated by offering credit terms will generally offset the premiums.

Here's a breakdown of the key terms used in trade credit insurance:

AIG has over 35 years of experience in trade credit, offering unparalleled local underwriting and policy servicing capabilities.

With decades of experience, AIG provides innovative credit management tools and insights for middle-market businesses, large corporations, multinationals, and financial institutions.

AIG's non-cancelable limits coverage and credit management tools are designed to help clients serve customers in more than 70+ countries.

AIG's expertise in trade credit insurance is a testament to its ability to adapt to the ever-changing global market.

Choosing a global commercial credit provider is a big decision, and you want to make sure you're working with a company that can keep up with your business. J.P. Morgan's suite of commercial cards can be tailored to suit your company's needs and evolve with you through different sizes and stages.

Their cards are accepted at an impressive 100 million locations worldwide, giving you the freedom to use them wherever you need to. This is the largest acceptance rate in the industry, making it a major advantage for businesses that operate globally.

Around-the-clock customer service and fraud protection are also top-notch at J.P. Morgan, providing you with peace of mind and support whenever you need it.

When evaluating a global commercial credit provider, choosing the right card is a crucial decision.

You can monetize your business spend across commercial card programs, so it's worth exploring the best options for your organization.

Corporate Card and Purchasing Card are two distinct programs that cater to different needs.

A Corporate Card is designed for company-wide use, allowing you to manage employee expenses and track company spend.

This type of card is ideal for organizations with multiple employees who need to make business-related purchases.

A Purchasing Card, on the other hand, is designed for specific departments or teams, providing a more streamlined process for procurement and expense management.

This type of card is suitable for organizations with well-established procurement processes and a clear understanding of their spending habits.

Trade credit insurance can be a game-changer for companies looking to expand into new markets. By protecting against non-payment by buyers, it allows companies to take on new customers and tap into diverse revenue streams.

AIG's trade credit insurance solutions are designed to support companies in entering new markets, with a global network spanning approximately 70 countries and jurisdictions. This network enables clients to access trade credit solutions around the globe.

With decades of experience in providing sustainable solutions and market-leading claims expertise, AIG can help support strong, long-term relationships with brokers and clients. This expertise is also reflected in the company's innovative credit management tools and insights, which are available to mid-market to multinational clients.

Here are some key benefits of AIG's trade credit insurance solutions:

Handling Economic Volatility can be a significant challenge for businesses.

Trade credit insurance is worth considering if facing uncertain economic times. It can protect you if customers default or declare bankruptcy. Moreover, it provides stability, making it easier to weather bad times.

Businesses have navigated various global macroeconomic and political challenges in the first half of 2024, and their resiliency may be further tested in the months to come.

To mitigate the risks associated with economic volatility, it's essential to have a solid plan in place. This can include diversifying your customer base, maintaining a cash reserve, and exploring alternative financing options.

If you're looking for ways to protect your business from economic volatility, consider the following options:

The first half of 2024 has been marked by significant changes in the credit specialties market. Our latest Market Update highlights the shifting risk landscape and the insurance market's response.

The changing risk landscape is a key consideration for businesses looking to manage their risk and enable growth. This includes trade credit, surety, structured credit, and political risk.

Businesses need to be aware of the changing risk landscape to make informed decisions about their risk allocation and management strategies. The insurance market's response to these changes is also crucial to consider.

Our Market Update provides insights to support businesses in their decision-making processes. By considering the changing risk landscape and the insurance market's response, businesses can make more informed decisions about their risk allocation and management strategies.

In the first half of 2024, businesses have navigated various global macroeconomic and political challenges.

The changing risk landscape has been a major concern for many companies. According to the Credit Specialties Market Update: H1 2024, the insurance market response has been critical in helping businesses manage risk.

Businesses' resiliency may be further tested in the months to come, but with the right strategies, they can adapt and thrive.

Here are some key takeaways from the Credit Specialties Market Update:

By staying informed and adapting to the changing market conditions, businesses can make informed decisions and drive growth.