Role of Insurance in Funding
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In addition to its primary function – the protection of creditors from the risk of non-payment by their buyers – credit insurance considerably helps undertakings obtain the funding of such insured receivables.
The policy is used:
as a security for the financing institution that provides a loan for the funding of receivables.
This “added value” of credit insurance is very significant, and in many cases, it allows clients to reach a loan in the first place, since the financing institutions are offered a security that would otherwise have to provided by the client by pledging their assets as a security.
Generally all banks and financial institutions of the factoring or forfaiting type accept credit insurance as a guarantee for provided funds.
If you are interested in this service, it is necessary:
to first discuss the acceptance of securing the assigned/pledged receivables by KUPEG credit insurance with your financing institution
to agree with your account manager in KUPEG on the preparation of contractual documents
to proceed in accordance with the contract and the terms and conditions agreed with your financing institution
The following chart describes the situation where an insured company uses credit insurance as a security for provided funding.