Credit Risk Insurance
Credit risk insurance is a method vineyards can use to protect their most liquid asset (no pun intended) - their receivables - against the risks of non-payment resulting from insolvency, protracted default and contract repudiation.
This form of cover also protects against import / export license cancellation and Political Risks.
Just as importantly, with cover in place on open account sales vineyard bankers can then regard the receivables as ‘Realised assets’ rather than ‘Unrealised assets’ as the credit insurance policy is being used as a collateral security. This then provides an enhancement of the businesses funding programme, reduces rates and increases facilities. For example without credit insurance, receivables may only be recognised for 30-40% of their invoice value whereas with cover in place this may increase to 85-90% of value. This in itself can release private equity that many owners of businesses may have otherwise had to inject into their business. Such other devices of security such as personal guarantees can generally then be renegotiated as credit insurance policies guarantee debtors payments will be made as the policy becomes a form of collateral security.
Gold Medal Vintage Insurance has direct access to this form of protection and welcomes any enquiry from the wine industry.