In addition to protecting your largest asset against the insolvency of your customers, preserving your profit, liquidity and cash flow, there is an important and directly measurable benefit to debtors’ insurance: the confidence to grow and expand your business by increasing insured sales to existing and new customers.

To establish the return on investment the calculator below will allow you to estimate the premium cost, then using the accounts receivable turnover (annual credit sales divided by the debtors’ ledger balance), the addition insured credit limits required to cover that expense. The addition of only one average credit limit is usually more than sufficient to cover the premium cost to insure your entire debtors’ ledger, and each dollar in underwritten sales above that generates additional profit for your business.

This should be compared to additional sales required to cover the cost of uninsured insolvency of average credit exposures, which is the best case compared to the loss of a major customer, and the cost of self-insurance in terms of rejected or restricted credit limits, and the value of lost sales and profit.

Contacts NCI if you would like to discuss anything about the calculator.