Video explained– How does it work?

• A customer orders goods or services from their supplier – the supplier delivers the order – on credit.

• In the time period between the delivery of goods and services and actual receipt of payment, suppliers provide their customers with what is known as “trade credit”. Each year this amounts to hundreds of billions of pounds in the UK alone.

 

The problem?

• Liquid capital tied up in this way can often account for as much as thirty percent of the balance sheet. This means suppliers are often reliant upon their customers having good payment practices – if they don’t, any outstanding balances have the potential to become a source of high risk.

• The impact can be devastating - even the healthiest of businesses can find liquidity dries up.

 

The result?

• They struggle to foot the bill for their next delivery, and if the outstanding amount is significant, it could result in financial difficulties or even bankruptcy for the supplier.

• It could – but our supplier has mitigated this risk of this happening by taking out a credit insurance policy from Atradius, which will pay out up to 85% in the event of his buyer not paying his bills.

• Because Atradius continuously monitors companies on behalf our policy holders, things rarely reach this point, however. We assess the present and future creditworthiness of the company concerned and advise our policy-holder accordingly.

• We do this through a global branch office network based in over 40 countries, using up- to-date information gathered from more than 52 million companies.

• Thanks to this early warning system, the policyholder is able to keep track of their business partners’ creditworthiness at all times – allowing them to focus on the most profitable transactions for their business.