Credit insurance

High risk when payment is not made

In 2019, Kredinor received 64,000 cases related to insolvency and bankruptcy, worth a total of NOK 994 million. This includes 1,960 clients who did not receive payment of one or more claims, due to the insolvency of a corporate customer. With credit insurance, a large part of the amount due could have been safeguarded. Kredinor finds that professional clients have a very high level of confidence in their own suppliers when it comes to payment. Many companies give payment deferrals rather than payment reminders when customers do not pay. It can be a costly “kindness”, leading to unnecessary financial losses if non-payment is due to the customer’s insolvency.

Norwegian companies go a long way

In our experience, Norwegian businesses show a high level of trust and loyalty to their customers when it comes to following up unpaid claims. They often seem to focus more on selling than on ensuring they are paid. If more emphasis is placed on following up as soon as the payment overdue, we can provide faster information about the customer’s financial situation – and indications of insolvency can be detected. A customer’s failure to pay may seriously impair the client’s liquidity.

The importance of the payment flow

In order to maintain good liquidity, and have the funds needed to pay your own bills, it is important to have a foreseeable inflow of payments. If the payment flow is erratic, the company may experience a liquidity shortfall, and could end up having serious payment problems itself. Our advice is to give brief payment deferrals – but only if your company has the liquidity to do so. And if payment does not materialize, don’t hesitate to send unpaid claims to Kredinor. The earlier we can start working on the claim, the higher probability of getting paid. If the customer has gone into liquidation, it is additionally important get your claim in early.

Credit insurance can cover 60-90%

None of the 1,960 clients with close to a billion outstanding claims were insured against losses. Kredinor recommends that all trading companies take out credit insurance from the credit insurance company Euler Hermes. Among other things, Euler Hermes offers the credit insurance Enkelhet. This insurance covers 60-90% of the amount lost, if the loss is reported within 90 days of the due date on the invoice. Large parts of the losses incurred by clients in Kredinor’s portfolios in 2019 could have been saved if the companies had taken out credit insurance.

Credit insurance in 1-2-3 (Kredinor)

• The company continuously follows up unpaid invoices from corporate customers
• The company sends unpaid invoices for collection
• Euler Hermes is notified no later than 90 days after the due date on the invoice
• From default has been reported, Euler Hermes, Kredinor will try to collect the claim for another 120 days
• If the claim is not recovered within 120 days, Euler Hermes will compensate the amount owing

Credit insurance in 1-2-3 (Euler Hermes)

• Get in touch to enter into an agreement with Euler Hermes
• All the company’s deliveries from the date of the 1st of the current month are automatically covered by the insurance.
• The company can credit check all its customers via Euler Hermes, which monitors and notifies if the rating changes.

Want to know more about credit insurance?

Contact Euler Hermes via web.