Biggest mistakes -> insurance of your A/R

Once you are insuring your account receivables you need to be sure to be careful. All the time you need to care of following:
a) is really AUTOLIMIT for me? Insurance companies like me to pay for insurance I will, in the end, get no money from. Once this situation happens they will tell you: "We are sorry, you did not read the conditions properly, we will not give you money". And this is too late. Do not trust any autolimits, whats so ever. You need to have a positive experience with your customer. Positive experience means, that within 120 days (or 90 or 150, depends on your negotiation skills) you must have at least 2 invoices from the same supplier paid maximally 30 days after the maturity. If you dont have 2 invoices like this, or if there is an invoice, that is paid over 30 days there is no autolimit. You will pay for it, as you need every month to announce amount you did issue on autolimit, but you will not get any money. And also be careful. Maybe your autolimit maximum is 20.000 EUR per customer. One customer is opened 21.000 EUR and in this case you will get no money, non. Not even 20.000, or some portion of 21.000. No money.

b) Selective customers. This is usually very long process to get trough all application. It is worth, it costs more money and also you may not be sure, why the limit is not approved. Usually they care about recent P&L, or BALANCES. They care about the payment history the company has. If they find: Negative equity, that your customer in 90 days overdue with his payment, Decreasing equity, Currently open claim on payment, Strong pressure on liquidity you may be sure no limit will be assigned. That is the time you have your negotiation power to ask them to mitigate. Usually you will be told there is no way to mitigate. It is. Some of the ways:
1. guarantee of other company
2. providing of current financial number of your customer
3. your history with your customer

c) be very careful on so called "consignment store". Usually this is non insurable business. Your customer need to issue to you an invoice to get insurance.