IRC GROUP .:. International Risk Consultants

IRC Cost Benefit Analysis for Domestic Sales Welcome to the IRC Credit Insurance Cost Benefit Analysis. The purpose of this calculator is to provide a general idea of the value proposition behind credit insurance. By entering just four pieces of data one can see the effect of catastrophic losses on gross margin, and the incremental sales and credit limits needed to pay for a credit insurance program. You will see from these calculations that the modest premium for credit insurance is greatly outweighed by the potential lost margin risk it mitigates, and how few incremental sales dollars it takes to justify a credit insurance program. Of course, this is just one way to look at the benefits of credit insurance and does not take into account other important benefits such as financing, and sales motivations. I. Additional Sales Needed To Replace A Credit Loss
Note: Please enter amounts as whole US dollar amounts (No symbols). Commas are acceptable but not necessary.
1. Annual Insurable Sales: Estimate your insurable open account sales for the next 12 months. Insert this figure below in whole dollar amounts. (i.e. monthly sales X 12 to yield annual sales)
$
2. Gross Margin%: Estimate your average gross margin percentage on your insurable sales.
%
3. Bad Debt Write-off: Assume an average size customer defaults and enter the credit limit under scenario 1. Assume a very large customer defaults and enter the credit limit under scenario 2
Scenario 1 (Average loss) $	Scenario 2 (Catastrophic loss) $
II. Incremental Sales to Pay for Credit Insurance
4. Domestic DSO: Select your average Days Sales Outstanding (DSO) on the above referenced portfolio.
Days