One of your primary responsibilities as a policyholder is to take steps to prevent and minimize losses.
To do this, always be sure that you:
You must be able to establish both of the following two facts:
First, that the debt exists (that is, the customer owes you a specific amount of money)
Second, that you shipped the goods or provided services to the customer according to the terms of the contract
Proving these points will be easier if you can provide the following documents and/or information:
A contract or purchase order
Credit information on the customer (unless the customer was formally approved by us)
Proof of shipment, such as bills of lading, waybills or written acceptance by the customer
Evidence of follow-up on slow payment
By keeping the proper documentation, you will have all the information you need to submit a claim if this is ever necessary.
Contracts and purchase orders
The most effective way to prove that a debt exists is to have a legally binding contract or purchase order. Any changes to the terms or conditions of the contract or purchase order should be in writing.
Remember that, as a party to the contract, you must adhere to your contract obligations. If the goods cannot be delivered as ordered or on time, we suggest that you obtain written agreement from the customer to make partial shipments or a later shipment.
At a minimum, contracts and purchase orders should always:
Be in writing, signed and dated by both parties
Identify the full legal names of the seller and the buyer
Clearly describe the goods or services being sold
State the price, currency, payment terms and delivery schedule
Other ways of proving a debt exists
Other means of proving a debt include the following:
The customer has sent a cheque for the full amount owing, but the cheque was returned due to non-sufficient funds.
You have a signed draft or promissory note from your customer.
The customer acknowledges the debt in writing and advises that payment will not be sent by the due date.
Early attention to overdue receivables is financially prudent and has proven to be effective in avoiding losses. Your follow-up will vary depending on the size of the receivable, as follows:
If the overdue receivable is $100,000 or less
Most policies do not require you to report overdue accounts of $100,000 or less and is considered a loss only once an amount has been outstanding for 120 days past the due date. Before submitting your claim, you can request that the account be placed with a collection agency at a preferential rate we have arranged. Refer to the “Claims and Overdues” section of your Coverage Certificate for the details of reporting overdue accounts and to determine the waiting period that applies to each insured event.
If the overdue receivable is more than $100,000
All accounts more than $100,000 that are also more than 60 days past due must be reported to us. Refer to the “Claims and Overdues" section of your Coverage Certificate for the details of reporting overdue accounts under your policy.
Reporting an overdue
Reporting an overdue can be done online using our credit insurance platform. We will then contact you to discuss loss mitigation options. You are also encouraged to contact us at any time to discuss additional courses of action. These options will vary depending on your customer’s country and industry, and may include:
Sending a collection letter on the insurer's letterhead
Engaging legal counsel
Establishing a repayment schedule with the customer
Collection agencies and services
As a loss mitigation measure, we suggest you consider placing overdue accounts with a collection agency. Using the services of a collection agency can be an efficient and cost-effective way to collect debts, particularly for smaller amounts.
To take advantage of the preferential rates we have arranged with various collection agencies, you can request this service online when reporting an overdue or when submitting a claim. The collection agency will deal directly with you while providing us with regular updates. The agencies work on a “no collection, no fee” basis and all amounts recovered (less the collection agency’s fee) will be forwarded directly to you until EDC pays a claim. If you have placed an account with a collection agency yourself, you will be asked to provide the collection details when you submit your claim.
Problem accounts are those that are not yet due but may, based on information you have acquired, result in a loss. This information could be first-hand or from other sources—for example, hearing that the company is having financial troubles or that other suppliers have not been paid.
Bankrupt or insolvent customers Typically, claims are admissible when a covered loss has occurred and the debt has remained unpaid for 120 days from the due date. One important exception is when a customer has been placed into receivership or has been declared bankrupt. In this case, a claim is admissible immediately.
Speak to our customer care team weekdays between 7 a.m. and 8 p.m. ET at 1-866-716-7201 or firstname.lastname@example.org.