Basics for Banks

Posted by on Aug 6, 2013 in Articles | Comments Off on Basics for Banks

Collateral Enhancement

The largest current asset on most balance sheets is the Accounts Receivable. It is, as a result, an important element of collateral for many lenders. Enhancing that asset’s quality with Accounts Receivable (Credit) Insurance can be a good choice for a bank and for the creditor. If a concentration of risk exists with a small number of buyers, or if a large portion of the A/R asset is to foreign buyers, the bank may require Credit Insurance to mitigate these special risks. Mitigation of risks of non-collection for a creditor can ensure business survival (and your continued relationship) if a buyer should default for a significant amount.

Credit Department concerns

Credit departments often have concerns about how credit insurance works, and, as is the case with any insurance, how well the bank is protected by the policy. An experienced credit insurance broker like Brett Tarnet can assist by pointing out what the major policy compliance issues are, and how the audit and/or borrowing base process can be fitted to monitor compliance with requirements.

How We Work With Banks

We work directly with banks to structure best-fit credit insurance solutions, and when banks refer their valued clients to us, we make sure the referring officer remains informed.