Product Review

Limit of Discretion (LOD)

What is a Limit of Discretion?

This term is used in the Trade Credit Insurance industry and varies from insurer to insurer (in respect of the details), but the basic outline remains the same.

A limit of discretion is the maximum amount of credit that a credit provider may grant to an individual buyer (commercial or consumer), under the cover of your Trade Credit Insurance Policy, without first obtaining the approval from the Insurer. The amount and conditions attached to this limit are defined within the Trade Credit Insurance Policy.

Generally, this is done to save time, since the process of getting approval on every single buyer, regardless of the level of credit, would take a significant amount of time to process – slowing down the ability to open new accounts.

The LOD reduces the administrative time it takes to grant credit significantly.

Conditions are attached to the LOD, and vary from industry, client and insurer.

LOD Renewals

A limit must be renewed and re-assessed in the prescribed period for it to remain valid on a subject and meet the criteria set out by the insurer.

Cred-it-data offers a full range of products to not only manage your LOD by alerting you to renewal dates but also customised products to meet your Trade Credit Insurance requirements.

We offer customised renewal options, with a variety of custom products that includes clearance Reports, Bank Codes, Trade References,
and proactive monitoring (Business/Principal).

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