Fed up with your credit insurance? There are alternatives.

31/03/17. By David Hawkins.

We at CPA  generally endorse Members’ use of credit insurance as a useful weapon in the constant battle against incurring bad debt write-offs.

However there are times where the product does not entirely meet the needs of a business, especially an expanding SME with a wide range of customers who have variable credit records. In such cases, it is difficult for the supplier to persuade the insurer to provide a credit limit that will allow a satisfactory trading relationship to be developed with the customer.

Credit insurance is usually a  product applicable to full turnover so it is a frequent complaint by credit insured clients that they are forced to pay premiums on their well rated “blue chip” customers in order to get a measure of protection upon sales to the more marginal accounts where lurks the real risk.

CPA usually has a viable solution through CPA (PAID). Which is the debt purchase division of CPA (PAID is an acronym for Payment Against Invoiced Debtors).

CPA (PAID) purchase debts at our risk which have been referred to the CPA overdue account recovery service and have not paid in full. Given the effectiveness of the letter cycle these debts usually represent a very small minority of the debts referred, so PAID is able to take a more relaxed view of the credit risk involved, despite the fact that PAID is taking the risk of bad debt – often up to 90% of the face value.

The member has the entire choice of which debts to submit for purchase by CPA (PAID).  The debt purchase critera are based upon the degree of care and prudence exercised by the Member in granting credit, rather than the credit-worthiness or balance sheet characteristics of the debtor.

Accordingly, PAID frequently pays out against debts due from debtors who would be unlikely to meet the requirements of a credit insurer.   The PAID service works with minimal paperwork. There are no reporting requirements aside from the need to refer to the CPA overdue account recovery service and is very cost-effective.

For a non – obligatory confidential discussion please contact David Hawkins, General Manager CPA (PAID)

Direct line 020 8846 0075                                           – d.hawkins@cpa.co.uk


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