AIGExtra

UK

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PrincipalCustomer

Overview:  Allows clients the flexibility to select the number of key trading partners to be covered, so all credit limits above the PrincipalCustomer level are insured and vetted by us through our online platform.

Who is it for?:  Companies with turnover in excess of GBP 15m selling on short credit terms.

  • Typically 40% of a company’s assets are in the form of accounts receivable In any given year, 2/3 of small businesses will have to deal with the insolvency of a customer (Financial Times 13/8/2004)
  • Annually around 18% of UK company failures are due to bad debts, loss of working capital or cash flow (Association of Business Recovery Professionals, July 2004)
  • To earn back the value of one bad debt of £75,000, a £15 million pa turnover business enjoying a 5% profit margin would need to increase its turnover by £1,500,000 pa

Businesses don’t hesitate to protect tangible assets such as buildings, machinery and stock. But many seem unaware of how vulnerable they are to payment default by one of their key customers until it’s too late.

The increasing globalisation of customer networks creates opportunities for companies, but also brings with it new threats. With the acceleration of economic and technological change, climatic and political problems impacting countries and a volatile trading environment, the threat of non-payment is becoming more and more acute. Increasing competition has intensified pressure on margins which means the impact of a bad debt on a company is greater than ever before.

Most companies have concentrated trade with a number of key customers, making those companies especially vulnerable to a failure to pay by one of them. Annually, over 20% of UK company failures are caused directly by a bad debt. The risk of suffering a bad debt has never been greater and seemingly none of your customers is immune from catastrophic collapse

Cover Back To Top

Cover written for all Buyers whose credit balance exceeds the agreed PrincipalCustomer level

Cover is provided up to 90% indemnity for

  • Protracted default of customer
  • Insolvency of customer
  • Political Risks (optional)

Two policy options:

  • No deductible cover with cancellable limits
  • Deductible cover where non cancellable limits may be available

OPTIONAL SERVICE:

Debt Collection services are available but not mandatory.
The waiting period on protracted default claims is shorter when collection services are used by the Insured.

ONLINE CREDIT LIMITS:

Online credit limits and monitoring are available through AIG credit limit platform, AIG Global Limits.