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