Managing Insurance for Potential Risk Customer

This document explains how you manage customer insurance to protect against losses from unpaid receivables.

Customer insurance is often used in combination with a general sales agreement with a potential risk customer. If the customer/payer fails to pay, the insurance company will compensate you up to the amount insured.

Outcome

You are insured against losses caused by a specific payer as long as they do not exceed the amount insured. In compensation you are charged an insurance premium. Payers are registered with insurance information and insurance limits.

Use this process to minimize disturbances in the company's cash flow.

The customer master file (OCUSMA) is updated.

Before you start

  • The company must have identified the risk factors to include when assessing whether a customer is creditworthy.
  • For customers with exceeded insurance limits to be included when selecting transactions for the credit monitoring routine in 'Credit Monitoring. Select Transactions' (RMS410), the 'Insurance limit exceeded' check box must be selected in 'Settings - Credit Monitoring' (RMS905/E).

Follow These Steps

Outline

  1. Apply for Customer Insurance

    Contact your insurance company and apply for an insurance to cover for unpaid receivables regarding a specific customer. Register the unapproved insurance limit for the customer in 'Customer. Open' (CRS610/K).

  2. Register Insurance

    When the insurance is approved, register the insurance for the customer in (CRS610/K). This includes information on insurance company, the company's insurance number, number for the specific insurance, and a user-defined insurance status.

  3. Send Insurance Reports to the Insurance Company

    Create reports of the insurance status for the customer and send it to the insurance company, according to the requirements.

    You can print reports with all payers with open and past due invoices in 'Customer Insurance. Print Amount' (RMS535) and 'Customer Insurance. Print Days Overdue' (RMS530) respectively.

  4. Follow Up Exceeded Insurance Limits

    By adding exceeded insurance limits as a selection criterion when selecting payers for the credit monitoring routine, you can directly see what payers are in the risk zone.

    Matching payers are displayed in 'Credit Monitoring. Process' (RMS420).

  5. Decide What Action to Take

    If the limit is exceeded, decide how to proceed. You can, for example, block the payer from further orders or apply for a higher insurance limit, depending on how trustworthy you find the payer.

  6. Report Losses to Insurance Company

    If the payer fails to pay, in spite of payment reminders and collection assignments, contact the insurance company and claim compensation for the losses.

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