What is the difference between factoring and credit insurance?

What is the difference between factoring and credit insurance?

Factoring is an agreement whereby the factor usually monitors the payment of invoices. Depending on the type of policy, the factoring company may also provide pre-financing and indemnify the policyholder for damage suffered.

The most extensive type of factoring policy covers:

  • debtor administration
  • pre-financing
  • debt collection after the due date
  • risk of non-payment 

A credit insurance policy offers you the following services:

  • investigating the creditworthiness of debtors
  • ongoing assessment of the customer portfolio
  • debt collection
  • paying compensation to the policyholder for a claim with cover