Imagine you could see the future and avoid non-paying customers, freak weather, tech disasters and other calamities. With trade customers holding the potential to both make and break a business, financial protection is top of the agenda for most business owners – and this is precisely the role of credit insurance.
Transferring risk away from the business and over to an insurer, credit insurance protects the policyholder in the event of a customer becoming insolvent or failing to pay its trade credit debts. As well as this, insurers can actually help to reduce the risk of financial loss through credit management support.
- Deals With Problem Payers:
Many business owners are kept up at night by fears that their customers might pay important invoices late, or worse, not at all. One in every 10 invoices becomes delinquent
- Can Cover Non-Payment Due To A Variety Of Risks
Risk comes in all shapes and sizes but trade credit insurance can deal with some of the most unlikely reasons for non-payment. This might include political risk or the effects of freak weather which are especially important if you’re looking to expand into other markets.
- Makes New Prospects Safer
Bringing on a new customer can be risky – especially if you don’t have the time or resources to check them thoroughly. By insuring against non-payment you can be more confident when building your client base that late or non-payers won’t hinder your progress.
- Enables You to Offer Better Credit Terms
The peace of mind that comes with trade credit insurance enables you to extend trade credit to prospective customers. Credit insurance can enable a company to increase sales by up to 20%. This could be a deal-clincher giving your business an added point of difference from the competition.
- Gives You More Clarity About Customers
Businesses gain a crucial advantage with credit insurance through a monitoring service that checks the financial health of your customers. This gives you a vital early warning if a key client gets into hot water. For example: average days sales outstanding (DSO) increased by two days in 2017 globally to 66, the highest level since 2007.
- Is Respected By Funding Organisations
Banks and other lenders look more favourably on businesses with trade credit insurance because their cash flow is secured. As a lower-risk business, you might even be offered better terms on your finance packages. On average banks will lend up to 80% more on insured receivables.
- Could Prevent A Catastrophic Loss Of Revenue
Have you ever thought about how much extra revenue you would need to generate in order to safeguard your margin if one of your customers failed to pay? Accounts receivable typically represents more than 40% of a company’s assets, yet isn’t always insured in the same way as buildings or machinery. In the most extreme cases you could go out of business altogether.
Trade credit insurance serves as a firewall so that you’re covered if the worst does happen.
- Gives You Confidence In Tomorrow
It’s always a good idea to run a risk assessment of your business. With the right insurance you can be more certain about the future making it more likely you’ll hit your revenue and growth targets.
To find out more about our Credit Insurance offering and protect your business earnings contact an expert member of our team today.