Welcome back to the fifth edition of the National Collection Services special cash flow discussion. This week we are speaking to Mr Mark Browning of Prasidium Trade Credit Insurance to learn about some protective measures a business can take when looking to mitigate losses on their accounts receivable ledger. If you or anyone you know needs the services of a debt collector or to insure your receivables assets please email me firstname.lastname@example.org or call 0447474222.
Mark thank you for meeting with us today, can you please provide a short summary about who Prasidium Trade Credit Insurance are and the services you offer?
Prasidium is one of Australia’s largest independent specialist credit insurance brokers. Collectively we have over 150 + years combined credit insurance experience within the company which consists of both broking and risk underwriting experience. Offices in Brisbane, Sydney & Melbourne and servicing capabilities Nationally. Full service Broker, offering Trade Credit Insurance, Surety Bonds and Credit Risk Management services.
How does trade credit insurance work?
Trade Credit Insurance (also known as Debtors Insurance) protects businesses from bad debts and insures the accounts receivable; by protecting businesses from unpaid invoices caused by non-payment from a customer (insolvency and Protracted Default). Trade credit insurance works by insuring businesses against their buyer failing to pay, giving them the confidence to trade at higher levels and with new customers they previously had no history with.
Question – What events need to occur for the policy to pay out?
Claim triggers are Insolvency (administration, liquidation, bankruptcy, DOCA, receivership) and also Protracted default (Waiting period varies from 120-180 days from due date). Cover is extended to cover political risks and non-acceptance for export transactions.
Question – What business suits Trade Credit Insurance?
Any business selling their goods and/or services on credit terms will essentially have an exposure to non-payment of those invoices. Key industries: Building & construction, mining, manufacturing, wholesale, distribution, labour hire, fuel, transport, food & bev, electronics, logistics, advertising, printing.
Question – Do you offer insights to your clients such as placing stop debtors on stop credit?
Insurers will continually monitor insured buyers and offer insights flagging adverse information on debtors (e.g. overdue payments with another supplier, collections actions, court actions, repayment arrangements etc). Prasidium also offers this monitoring service and helps to flag potential issues for clients in trying to help the client be proactive in mitigating the risk.
Question – How Quickly should clients take steps to commence debt Recovery proceedings?
Clients can commence debt recovery proceedings as soon as the debt becomes overdue. Overdue debts must be reported to the insurer typically after 60 days from the due date. However, the client does not need to wait this long until they instigate recovery proceedings.
With the tsunami of insolvencies expected post covid trade credit insurance or is a protection measure worth some special consideration. If you would like to talk to Mark directly you can contact him on 1800 795 475 or email him email@example.com
Next Week we will hear from National Collection Services very own Dale Hannan which will provide some great tips and insights for what is ahead.