Buy vs. Build: Determining Best Practices for Implementing Credit Insurance Management
Written by Paul Bower
The time is now. As economic changes and challenging world events persist, prioritizing the security of assets is as important as ever. Trade credit insurance has become a fixture in the risk mitigation programs of companies all over the world, from startups to global organizations. With receivables protected by credit insurance, businesses can find stability in a changing environment and the confidence to safely scale into new markets and opportunities.
Compliance Impacts Value
Credit insurance is an investment. The catch is that while credit insurance can be an incredibly valuable tool, its value depends on how well policies are monitored and managed. Its purpose is to protect businesses from financial loss in the event of non-payment by a customer or client. When an issue of non-payment arises, a policy holder files a claim with the insurer for reimbursement for the loss. However, if policy compliance, like coverage amounts and premium payment due dates, is not maintained, the likelihood of the claim being paid is low or even impossible. Maintaining credit insurance policies is crucial to ensuring a return on the investment.
Manual Management Drains Resources
Whether a business has one policy or multiple policies across insurance carriers, there are a few options when it comes to monitoring and maintaining credit insurance. In years past, manual monitoring with spreadsheets was the norm, but the industry is moving fast. With advancements in AI and new technologies emerging seemingly daily, the time spent, money lost, and errors associated with manual monitoring need no longer be tolerated.
Automation is Key
Finding avenues to create efficiencies in all aspects of business is important as time is increasingly difficult to spare. Automating credit insurance management not only saves company and employee time but also reduces the chances of costly errors due to incorrect data entry or compliance issues. By actively monitoring all areas of credit insurance, automated platforms aggregate data and send alerts in real-time when action is needed, making the use of spreadsheets and portals to track deadlines, pay premiums, or request coverage outdated and a risk to the business.
Buy vs. Build
After recognizing the benefits of automation, whether to subscribe to a management platform or to build one is often the next question businesses ask as they are thinking about how they invest in technology. Misconceptions abound when it comes to buy versus build, however, and it is important to thoroughly evaluate both options before choosing a way forward.
Building a credit insurance platform allows for a completely customized result. A business can focus on its pain points or transparency needs and build a product with functionality to close those gaps. For a company with an internal IT development team, the knowledge of what is needed to build a comprehensive product, and the time to do so, building can be an option. However, often, mobilizing quickly is a priority, and that is when buying or subscribing to a pre-built platform comes into play.
A misconception exists that the only options in buying a platform are to choose a generic solution or partner with a vendor that is not able to provide a comprehensive product. That is not the case. The best modern applications allow for configuration, customization, and for data to be presented in a manner that is unique for each business. With the right vendor, the platform can be perfectly tailored to a business’ requirements, eliminating the need to sacrifice functionality for a one-size -fits-all “solution.”
Quality vendors are committed to leveraging technological advancements to create a custom buying experience, giving users the feel of the build with the ease and benefits of the buy. They move quickly, with onboarding complete in a matter of days rather than in the years it would take to build a similar platform. Costs to maintain the software are shared with both the business and vendor investing in the growth and advancement in the platform ensuring that the service grows with the business. Partnering with a specialist vendor allows a business to deliver results more quickly and rely less on third parties to act as risk mitigation support. While field examiners, underwriting teams, and other partners offer important services and information, nuanced risk management such as a credit insurance policy analysis is not typically their primary expertise. Proven vendors with the right experience are specialists that provide valuable best practice advice, in addition to a technical solution.
Important Choice
Ultimately, making the decision to build or buy a credit insurance management platform requires a business to evaluate the positive and negative points of each.
Building a platform is a serious endeavor that takes time, money, and in-depth industry knowledge to build correctly and even more to maintain over time. It is an option that provides a custom result, but with the advancements made in the arena, building a platform may not be the best value for a company’s money. Buying a platform from the right people who add value and take time to understand the nuances of the business and its operations can often deliver a quicker and more cost-effective solution. Unless the consideration is being made by a tech company with the necessary internal resources to build or a unique business requiring insights different from any other company, buying a platform provides a practical solution allowing a business to focus on what it does best and lets credit insurance do its job.
For more information or to arrange a consultation on what we can offer you, contact Paul Bower, pbower@fgiww.com
This article is for informational purposes only and does not constitute professional advice. Investments always have the potential for loss. FGI, including its affiliates, makes no warranties about the accuracy or the completeness of this information and disclaims any liability (including direct, indirect or consequential loss or damage) related to the materials. Please consult your financial professional for advice relating to your circumstances and refer to our full terms and conditions.