CIT’s Select Customer Credit Protection is a risk management tool used by companies who are worried about the creditworthiness of one or more of their major customers but don’t want or need the full range of services provided by factoring or credit insurance.
Companies use this service when they are uncertain about the creditworthiness of a customer.
The customer may be reorganizing or in a turnaround situation. It may be in Chapter 11 or it simply may pose a large credit exposure that is beyond your comfort level. With Select Customer Credit Protection, you are protected in the event that the customer is financially unable to pay. CIT will assume responsibility and pay you the full amount due.
When does customer credit protection make sense?
Here are a few examples of how companies can use CIT’s Select Customer Credit Protection:
Customer concentrations
Companies with sizable customer concentrations have the potential for significant losses when one of their customers has financial difficulty. With CIT’s credit protection, you can continue to ship without the concern of taking a major credit loss.
Customers in turmoil
Credit departments may not want to underwrite the credit risk associated with shipping to a new customer with highly publicized financial difficulties. CIT’s credit protection will put their concerns at ease so you can close the sale without delay.
Enhance borrowing base
When a customer enters bankruptcy, many lenders refuse to lend against accounts receivable due from that customer. With CIT’s credit protection, you may be able to enhance your borrowing base because your lender will have increased confidence in your A/R collateral if it is enhanced by CIT.
Alternative to credit insurance
Companies that usually turn to credit insurance may find that customers in bankruptcy proceedings or with high-profile credit difficulties are uninsurable. CIT’s credit protection can provide the protection you are looking for.
What if I borrow against my accounts receivable?
It is a benefit to have CIT’s credit protection on your accounts receivable. Many lenders refuse to lend against accounts receivable due from a company in bankruptcy or suffering financial difficulty. CIT can work with you and your lender to make these receivables eligible.