These supply-chain issues, combined with rising costs of raw materials, transport and energy, have a significant impact on economic growth. Economic recovery slows down, and companies increasingly complain about the difficulties in supply and cost inflation. In this situation the risks of non-payment are greater. How do you prevent payment defaults from harming operations in your SME?
1. Recognize the warning signs in good time
Which companies are late payers? You only know about the companies you work with. A credit insurer on the other hand knows more. Much more. And can therefore detect the warning signs more rapidly.
After all, credit insurers have access to payment details relating to millions of companies worldwide. This database – containing real-time information - is founded on the disclosure obligation of insured customers. They are legally bound to report late payments.
The moment customers report that a company has delayed its payment, procedures are automatically launched to prevent any future non-payment by the same company in new transactions. Consider it a financial Coyote application to prevent non-payment.
2. Respond quickly and sufficiently to incidents
It is always helpful to recognize warnings in good time. But what makes credit insurance even more interesting at such a moment? The constant monitoring and actions that follow on.
Credit insurers monitor numerous information sources. This means it is possible to react very fast, not only during this global pandemic, but also during other macro-economic incidents. In this way the credit insurer can contact the debtor directly to acquire information (which is not publicly accessible) about the health of his or her company. Or a debt-collection procedure can be launched to recover the late payment.
The credit insurer failed to recover the money? Don’t worry. The insurance mechanism kicks in and you will still be compensated for the damage suffered. This is not only the case if the debt-collection procedure is unsuccessful. Most of our services are provided earlier on: the added value of a credit insurer is therefore largely in the procedures preceding the payment.
3. Credit advice and debt-collection services without an insurance component
Being first to know about the health of your customers is of great importance in this particular economic context. Remember the old saying, prevention is better than cure? In fact, this is now easier than ever.
As a recent new addition, a credit insurer such as Coface now also offers credit advice and debt-collection services, but without the insurance component. This solution provides SMEs with a “pay-per use” subscription, as an accessible formula providing credit analysis and debt-collection expertise the very moment you need it.
Suyin Aerts, journalist and entrepreneur continues the discussion of these topics with Kris Degreef, CEO at Coface BeLux.
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