You receive a call from a new prospect, New Company Inc., that is interested in purchasing $200,000 per month on 30 day terms. Before granting that credit limit, you do your normal due diligence — pull credit reports, references and try for personal guarantees. New Company, Inc., is new to the area and you don’t have any history with them. Their credit reports don’t show a whole lot of information, and they are reluctant to sign a personal guarantee or provide financial statements. You want the business but is it worth the risk?
After negotiations on your part to shorten their terms, ask for pre-payment or collateral, they pass and go somewhere else to purchase their fuel needs. You have just lost a deal that could have contributed to your company roughly 1,000,000 annual gallons of fuel.
Does this scenario sound familiar? How can you close this sale and still avoid the risk? Are there any of your existing customers that are currently bumping up against their current credit limit? If you could give them a higher limit, would they purchase more?
Often times, companies are forced to turn away business due to poor credit, or a lack of credit, with potential customers. Margins are thin and they feel they can’t take the risk of a non-payment. There is a solution for this problem.
Have you ever woken up in the middle of the night worrying about an existing outstanding receivable? They say they are going to pay but have yet to make good on their promise. Might you be second guessing that second load of fuel you sold them when they haven’t paid for their first? Has your customer’s open balance gotten so high that it could now truly hurt your cashflow if they don’t pay?
Many companies experience this sleeplessness when they don’t have to. They don’t think twice when insuring their trucks, buildings, equipment, etc. Your A/R can make up to 40% of your assets but is the most commonly uninsured. And, you’re more likely to file a claim on your A/R than the fire insurance of your building. For a fraction of a penny per gallon, it makes too much sense to not explore how credit insurance can help your company.
Fuel distributor insurance, also known as trade credit insurance, is a cost-effective sales tool that allows you to insure your receivables. With credit insurance you can safely sell more to your existing customers, go after new customers that may have been a credit risk in the past, and expand into new markets that you originally perceived to be too risky. Credit insurance offers solutions for safe and profitable growth:
Contact us to see how credit insurance can help grow your business while protecting you from losses. If you are already using credit insurance, we can help you see how your policy stacks up to the rest of the market. There could be some ways we could work with your carrier to reduce your premium or enhance the policy. Better yet, there is no fee to work with us. We work with all credit insurers and allow for the best rates and maximum coverage.
Insure your receivables and get some sleep…finally.