4 Common mistakes to avoid when making a Trade Credit Insurance Claim
Read your contract and avoid these mistakes to make sure that your deals are covered
We’ve mentioned before how important we believe SMEs are to the South African economy. That’s why we at Credit Guarantee are dedicated to helping our clients maintain their cash flows and protect their trading, both locally and abroad.
And that is why we want to make sure that you avoid some of the common mistakes that an SME might make that could affect the successful outcome of a potentially business-saving claim.
Ultimately, when you are dealing with the uncertainties posed by your debtors, you want to make sure you know your Trade Credit Insurance contract inside-out.
In that spirit, here are some of the most common mistakes businesses make when making a Trade Credit Insurance claim.
1. Filing your claim late
Probably the most common reason for the rejection of a claim, is the failure to adhere to the maximum reporting period. Late claims impact the Trade Credit Insurer’s ability to claim expended funds, thus undermining its ability to continue to serve its clients.
Make sure that you are familiar with the reporting period required by your contract and that you file your claim promptly.
2. Leaving out important details
Sometimes applicants leave important details out of their application forms, in an attempt to lower their premiums. Such information could include their history of payment defaults or debtors that they have chosen not to mention.
Don’t be tempted though. Omitting important information could lead to a failed claim and, therefore, could put your business’ bottom-line at risk. Up-front honesty could save you in the long-run.
3. Claiming on excluded risks
Always make certain that you are intimately aware of risks that are excluded from your Trade Credit Insurance policy. Avoid dealings that fall outside of the purview of your policy and make sure that you understand all of exclusions before attempting to file a claim. Such exclusions can include specific territories, certain definitions of goods and payment conditions.
Avoid unpleasant surprises by familiarising yourself with the boundaries of your policy, and contact your Trade Credit Insurer to clarify any terms that you are uncertain about.
4. Shipping when they aren’t paying
If your contract with your buyer states that payment should be made in advance, then your claim might be rejected if you began shipping before receiving that advanced payment. Likewise, if you continue to ship goods to buyers who are already overdue on payment, your claim could well be rejected.
At the end of the day, you must still engage in business responsibly, even if you are covered by Trade Credit Insurance. If your buyer isn’t paying, you must hold them to contractual stipulations as per your policy, and cease delivery until matters have been resolved.
Other possible errors
Ultimately, the most important factor to keep in mind is familiarity with and adherence to the stipulations in your policy. A majority of rejected claims are rejected because they fall outside of the terms of the policy.
At Credit Guarantee, we sincerely want to serve South African business and enable the success of our nation’s SMEs. That is why we work closely with you, advising on economic and trading climates, and doing our utmost to ensure that if your business finds itself in a position where a claim must be filed, it can be done so successfully.
Contact Credit Guarantee today, to find out more about our services or peruse our blog and learn more about Trade Credit Insurance.
Credit Guarantee is an Authorised Financial Services Provider FSP 17691.