This insurance is then pledged to the lender, assuring them that the claim will be received at all times. Even if the debtor is unexpectedly unable to pay.
The lender may pledge the policy to itself and not look at individual credit limits. A credit limit is the maximum amount the insurer will accept as risk from a debtor. However, it may also be the case that the lender actually uses credit limits as the basis for its financing. In that case, it does not finance more than the insurance limit. It is common for the employee responsible for debtor management to request a limit via the insurer's portal. Usually it is approved, sometimes it is disapproved or only partially approved. In such a case, it directly affects the financing. The company is then not paid 90% of the invoice amount (including VAT) as an advance, but a lower amount or even nothing at all. This therefore has a negative impact on the company's liquidity position.
Important
It is therefore important that the credit limit fully covers the outstanding risk. If this is not the case, it is advisable to contact Xolv to see if a sufficient limit can still be obtained by other means. Analysts at Xolv gather information about the debtor in question and can use this to convince the insurer that a higher risk is justified. If this does not work, there is still the option of additional cover above the insurer's limit. This is called a Top-Up and is provided by a specialised credit insurer or by the primary insurer itself. There are costs associated with this, but these are easily recouped, as the company can do more business with the relevant debtor risk-free.
Top-Up insurance requires specific knowledge of the product and the market, something Xolv's specialists have like no other.
