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Showing posts with label Customer. Show all posts
Showing posts with label Customer. Show all posts

Thursday, 8 September 2016

Why It Matters If Your Customer Has Business Interruption Insurance

As credit managers, we often get mired into performing the same daily activities. For example, if a new customer requires more than $5,000 in credit, we might only need a credit report. If the credit required increases to $20,000 then confirmation of several trade references might be in order. If this customer requires more than $100,000 then we might look at financial statements or obtain a personal guarantee. We all understand that as the credit limit required increases, the more the customer’s credit worthiness needs to be confirmed.
There comes a point when some customers may become so much a part of our own growth that if the customer ever has a sudden calamity which brings their operation to a complete halt, it could have a devastating impact on our own business. Knowing that our major customer has a Business Interruption Insurance policy as an integral part of their total risk management system, may be a valuable part of our own credit evaluation process.
Events that cause a business to temporarily stop operating entirely seem to have increased in number and variety, as well as severity. In the past few years alone, we’ve seen crazy natural disasters that have included the tsunami that devastated Fukushima, Japan, Hurricane Sandy, tornadoes across the Midwest and even as recently, the storms devastating South Carolina, to mention just a few.
Although I don’t claim to be an expert in the General Property & Casualty insurance products arena, I view some of the P&C products as effective direct extensions of what we do, which is to mitigate trade credit risks, protect cash flow, and preserve the equity that businesses work so hard to accumulate.
Business Interruption Insurance is generally designed to cover the income a company loses when it has temporarily stopped doing all business because of events beyond its control. It can also cover major expenses needed to get back into business and is an extra layer of protection that goes beyond more common insurance policies.
For example, if a factory burns down, Property Insurance can be used to cover the damages to a large extent but it won’t cover the potential income lost by what the factory manufactured and sold, or all of the expenses that might be necessary to continue operations. A typical Business Interruption Insurance policy will provide coverage for several major items:
  • The profits on sales the company would have earned if the loss had not occurred.
  • Normal operating expenses, even though the business is temporarily closed. This includes employees’ wages to keep them on staff rather than laying them off for an extended period of time.
  • The expense of moving the company to a temporary location and the cost to rent a new facility, or to build a new facility, whichever may be deemed more expedient and cost effective, as well as the costs of restarting up the business.
The payout amounts that a policyholder usually receives from Business Interruption Insurance are based on historic records of income and expenses. Historical financial statements and related documents (payroll records, accounts payable journals) need to be submitted to the carrier before any claim can be paid. As part of the policy processing, all copies of the necessary records should be held in possession by the carrier and agent with annual updates. This helps facilitate the claim process.
In most cases, Business Interruption Insurance providers include clear clauses in the policy concerning what will trigger a loss. In general, coverage will start a few days after the incident and reasonably last until the business is up and running again at their existing or new location.
Unfortunately, what Business Interruption Insurance doesn’t cover sufficiently are your payment obligations to commercial vendors who have already sold you their materials and other products or goods that were previously used in your manufacturing process. When the Business Interruption Insurance carrier looks to make vendor payments, they will examine the previous one or two years of invoices and compute an average, which may work in favor of the vendor or significantly shortchange them. Or, more likely, it will be up to you to make all payments to vendors for past invoices out of the insurance proceeds. The problem with this is that insurance payments for lost income are initially applied to the basics of recovery and not necessarily on what was owed at the time.
As credit managers, Business Interruption Insurance can be your good customer’s recovery safety net until they have indeed recovered. But don’t forsake Credit Insurance. Business Interruption ONLY responds in case of a covered physical loss at covered locations. Conversely, Credit Insurance widely extends your safety net from being highly impacted by your customer’s unexpected inability to pay you.

Sunday, 1 February 2015

Avoid Customer Burnout

We all need a break from our customers from time to time. Discover the signs and symptoms of customer burnout, as well as some useful solutions.


Dealing with people can be tough, but dealing with customers can be really tough, even if you work remotely and have limited or no face time with them. 
Have you noticed there are times when it seems like every customer call, email or visit has the one aim of driving you nuts, and as a result you become short tempered, grumpy and ready to react? 
Well then, you probably have customer burnout. 


The signs and symptoms of customer burnout

I learnt my own signs a long time ago: 
  1. My to-do list feels really ‘heavy’ and a little overwhelming. I read the list and don’t feel excited about the jobs on hand, when normally I would.
  2. I get slack at communicating, taking longer to return calls and emails.
  3. I avoid any hard conversations. They slide into the too hard basket.
  4. I choose activities like cutting my toenails, trimming my nose hairs or rearranging my tea bags instead of doing anything resembling productive work.
  5. I develop an incredible fascination with cat and dog videos on You Tube. 
As soon as the symptoms appear, I know I need to do something about it. It is the beginning of the burnout feeling and if left unchecked, only gets worse.

My strategies 

“ Have you noticed there are times when it seems like every customer call, email or visit has the one aim of driving you nuts? ”
Whilst it would be great to take a month off, as soloists, we rarely have the luxury to do that. So I developed a different approach. 
For me, I disconnect. I go somewhere in the wilds with lots of trees, water and animals. 
Nature restores my balance. A day at a beautiful creek: swimming, walking, exploring – followed by a great meal and a big sleep ensures that I’m good to go again. 

What about you? Need some ideas? 

We are all a little different, but we all have that one thing that recharges our batteries. 
How do you recharge? What’s the one thing that keeps you sane, especially when you’re running on empty? 
For some people it is spending time with an awesome person. 
For others it is climbing a mountain. 
I have a friend who closes up the house, gets 10 DVD’s, takes everything off the hook and hides from the world for the day. 
We all have our own recharging methods. If you don’t know what yours is, perhaps you need to find out. It took me years to realise that when I am stressed I need a nature fix in solitude. 
If you find that every day is filled with conflict and stress, maybe you need a break from people? It’s unlikely that the whole world is out to get you, but at times it probably feels that way. 
If you have less patience with your clients, maybe you should try working behind the scenes for a while?  Self-management is vital in business, especially for solopreneurs. Thriving as opposed to surviving is often a case of getting to know yourself better. Find your de-stressor and use it at the first signs of customer burnout.