Insurance that provides counsel for your business practices credit insurance: A new business partner. (International Affairs Section).

Imagine if your automobile insurance company warned you of an impending accident seconds before the accident occurred, allowing you time to change your course. Or suppose your disability insurance agent pushed you out of harm's way as a piece of steel came crashing to the ground from above. In reality, you are on your own until after you make a claim with your insurance company. It is only then that you experience the benefits of their services.

Accounts receivable insurance (or credit insurance) is a rare type of insurance because it can do exactly that--it helps you, the policyholder, adjust your business practices in order to avoid bad-debt losses from occurring. The insurer should be first and foremost your partner in risk management, a source of valuable information about your customers that would be nearly impossible to obtain without an enormous internal credit department. The credit insurer should monitor your customers closely, providing you with an alert system to avoid losses. When an unexpected loss does occur, credit insurance then takes on the form of a traditional insurance product and covers a policyholder's losses.

Anatomy of a Successful Partnership

A good partnership begins with maintaining a database of information on your customers or buyers. In addition to purchasing information from mercantile agencies, a quality credit insurer will gather information from sources such as banks, client and buyer visits, industry and economic analyses and past-due reports on delinquent buyers.

As with any financial planning, teams of industry analysts should monitor buyers daily and look for indicators of imminent financial distress. Analysts should ask questions such as: What percentage of capital is the company spending on debt management? Are earnings trending upward, maintaining stability or plummeting? What is the status of their relationships with current customers?

A global company will provide more comprehensive data gathering services through sister companies; they have access information on millions of companies worldwide. This broad wealth of information will allow you as a policyholder to expand sales to unknown buyers or countries, assured that you can trade safely and with confidence.

An early warning system is crucial to policyholders in an effort to prevent bad-debt losses. In circumstances where the risk of a particular buyer ...