Through the COVID-19 pandemic, cash flow has been a number one concern for many businesses. With business interruption common across several operations, there is a growing challenge resulting in a stretch of accounts receivable days. As they extend, there is also an increased risk of them becoming a non-performing receivable. During times like these, brokers should refocus on their collections process while assisting customers that may be looking for ways to make payments more manageable.
The COVID-19 pandemic has highlighted the challenges within receivables management in the insurance industry. The process has traditionally been pushed around, whether it’s to the client relationship managers or producers themselves, and if clients aren’t reminded of their payment obligations, it can easily get pushed down their list of priorities. Stuart Bruce, CEO at FIRST Insurance Funding of Canada, suggests offering a payment solution at the point of sale that is streamlined, easy to use, and well-branded, to help clients’ cashflow and speed up the rate at which brokers have their payments cleared.
“There are situations where brokers are essentially paying the insurance on behalf of their customers by letting payments remain outstanding while the policy is in force,” he said. “Having a straightforward payment process and receivables management solution allows brokers to reduce their exposure, while their clients can maintain their insurance.”
Traditionally, Bruce says there hasn’t been a good receivables management platform for brokers, so they have had to rely heavily on manual processes and their client relationships; FIRST Canada is striving to make it possible for clients to pay for their insurance just as easily as they pay for everything else.
FIRST Canada provides a digital payment option form to streamline the process and give clients an enhanced payment experience: multiple methods of payment within a click-and-pay format. By making payments easy, whether it be a monthly pay plan, a one-off payment on a credit card, or through Interac®, Bruce says they want to provide all the choice for the end client, in the same way they experience other payment interactions. The premium financing option, which allows a client to spread their payments over the term as opposed to paying a lump sum amount upfront, also helps the client preserve other lines of credit.
These tools are also fully customizable to the brokers’ brand and help protect the broker-client relationship. Bruce says there’s anecdotal evidence from brokers that one of every three broker-client conversations revolve around payments, making it an integral part of the customer experience and satisfaction. While receivables management should be prioritized all year round, the end of the year is a good time to refocus on the issue, especially in the uncertain economic environment.
“Paying for insurance has always been an afterthought because the product is front and centre,” said Bruce, adding that he completely agrees with the product being a priority. “However, the secondary process still needs to be optimized so the broker and client doesn’t feel like it’s a pain-point and negatively impact service. In this changing environment, collections will continue to be a challenge, especially in the commercial environment.
“The client knows they have to pay their insurance, and it’s a critical piece of operating their business, but if there isn’t an easy way to settle the client will focus on other noisier areas of their business. It’s important brokers streamline their own business model to ensure receivables can be collected in the most convenient and timely fashion as possible.”