Euler Hermes has launched Credable, a new invoice insurance brand that aims to “revolutionise the way that smaller businesses protect themselves against bad debts”.
In short, Credable uses the latest insurance technology (insurtech) to tackle the problem of late or unpaid invoices. Via a fully digital platform, it offers SMEs an on-demand insurance option that can cover a single invoice or buyer.
Credable has kicked off in Sweden initially, covering Swedish companies doing business across 17 European countries, with plans to expand over time.
The platform has two main features: it provides an instant “traffic light” risk calculator for an SME’s potential customer. Once a Swedish SME has been accepted onto the platform (after having gone through a KYC identification process) it can search a database and see the creditworthiness of a firm it is about to do business with. For this, the platform uses an API (application programming interface) to access Euler Hermes data on millions of companies around the world in real time.
The user can also automatically get a quote for insurance coverage of an invoice, and instantly buy it. The platform calculates the premium cost, based on the invoice size, the payment terms offered and the credit rating of the buyer.
Credable is the first stand-alone brand that has come out of Euler Hermes Digital Agency, a project established in 2015 with the goal of partnering with innovators to better manage credit risk.
Speaking to GTR, Richard Garnier, managing director of Credable, says the new product enables a company to “click-and-insurer within a few moments”. He adds that the aim of Credable is not to disrupt current Euler Hermes business – much of which is currently concentrated on large corporates – but to reach markets that have previously been underserved, the SMEs, by offering a product that better fits their needs.
As such, Credable has been developed after extensive research across 12 sectors and hundreds of SMEs in Sweden, Garnier explains.
“For an SME, the appetite to buy a one-year overarching policy and make a lump sum investment at the beginning of the year is limited,” he says. “SMEs tell us that they do know quite a lot of their customers and feel comfortable in their dealings, but there are other customers where they feel less comfortable, especially new customers in export markets, where the on-demand approach is preferential, because you control the investment you make in insurance and you don’t have to take insurance if it’s a low-risk scenario.”
Traditionally, SMEs have had limited options for managing late payment. Typically they use factoring, invoice selling or short-term financing, solutions that “got some pretty mixed reviews in terms of complexity of use and cost”, according to Garnier.
“Factoring tends to be costly, slow and selective. Bank lending may not be available and other grey market financing options tend to be too risky. So we really got the sense that people were looking for an alternative solution to this problem of late payments and uncertainty in the supply chain,” he says.
The Euler Hermes Digital Agency has since 2015 been testing solutions to reach the estimated 95% of trade that is currently done without trade finance or trade credit insurance instruments. Among other initiatives, it runs an innovation lab to work on new trends and test new concepts, and a “new business factory”, which takes successful experiments out of the Innovation Lab and scales them up.
While the agency is currently running a range of activities and partnerships, Credable is, Garnier says, the first stand-alone business brand to come out of its incubator. It has gone from concept to a fully operational digital platform in less than 12 months.
Since September 2017, Credable has undertaken tests of the beta product with potential business partners and clients, focusing on the four Nordic countries. Due to customer demand, Garnier explains, it has now added 13 more countries to the product, meaning that Swedish users can get cover for exports to countries like Italy, France and the UK.
He says they launched in Sweden for several reasons: it’s an easy market to test digital innovations, while also having a number of operational advantages, such as the ease with which one can carry out KYC and customer authentication through the country’s bank ID protocol.
Added to this comes the fact that Sweden is a big export market where the need for trade credit insurance is real: in 2016, 64% of Swedish companies reported negative impacts on their business as a result of late payments, up 12% on the year before.
Credable now has 100 registered SME users. Garnier says the first goal is to expand and create success in the Swedish market, which means continuing to open more markets in which Swedish companies can take insurance. In the medium term, the brand also plans to expand the product to other seller markets.