ADVANTAGES OF TRADE CREDIT IN­SURANCE

Alberta Oil - - REPORT ON | FINANCE -

• Can get TCI on in­ven­to­ries • Risk mit­i­ga­tion – se­cures bal­ance sheet against po­ten­tial loss • Re­moves risk of cus­tomer de­fault­ing on credit terms or open ac­count sales for up to 365 days • Mit­i­gates con­cen­tra­tion risk on cus­tomers • Pro­vides credit pro­tec­tion and in­for­ma­tion on un­known buy­ers • Fi­nanc­ing and se­cu­ri­ti­za­tion – pro­vides bet­ter

terms than a fi­nan­cial in­sti­tu­tion • Pro­vides ac­cess to cap­i­tal by margin­ing ac­counts re­ceiv­able and in­ven­tory • Sup­ports lower requirements for let­ters of credit with ad­di­tional se­cu­rity • Pro­vides ad­di­tional se­cu­rity when fac­tor­ing ac­counts re­ceiv­ables • Credit En­hance­ment – pro­vides in­stant pro­fes­sional credit pro­to­cols • Pro­vides credit limit for a cus­tomer and mon­i­tors port­fo­lio per­for­mance dur­ing the pol­icy pe­riod

• The in­surer acts like an ex­ten­sion of credit de­part­ment low­er­ing ad­min costs • In­crease sales – uses ex­tended terms to gain new busi­ness • Cor­po­rate gov­er­nance – pol­icy demon­strates pro­fes­sional pro­to­cols • Re­duces bad debt re­serve • Gives a sec­ond opin­ion on cus­tomers’ credit lim­its and mon­i­tors cus­tomers’ port­fo­lios

• Re­v­erse no claims bonus op­tion • If you go for one year with no claims the in­surer will re­fund 10 to 15 per­cent of the premium re­duc­ing how much your com­pany ac­tu­ally pays for it, keep­ing you mo­ti­vated to mon­i­tor

• First shot over se­cured cred­i­tors in­clud­ing Rev­enue Canada, as TCI cov­er­age is out­side of your debtor com­pany as­sets if they go bust • Pos­i­tively im­pact share prices along with re­turn on cap­i­tal in­vested

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