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Six reasons to consider trade credit insurance


"One of the challenges for businesses looking to grow during uncertain or challenging times is the risk of not being paid by customers. Non-payment makes it difficult to predict and manage cash flow accurately, which in turn makes it difficult to not only expand but, often, to conduct business as usual. Being unable to pay suppliers or staff, for example, due to non-payment by customers, exposes businesses to significant risk".

“Businesses can mitigate this risk with trade credit insurance. This type of insurance covers the business for non-payment by customers, protecting precious cash flow and letting the business operate with confidence.”

There are six reasons businesses should consider trade credit insurance in the new financial year:

1. It’s affordable. Premiums are calculated based on a percentage of the turnover combined with the level of risk, so the cost can be much lower than many business decision-makers expect.

2. It offers peace of mind. Doing business with new customers is essential for growth but can be risky if those customers are likely to default on payments. Trade credit insurance makes up the shortfall if that happens.

3. It helps with due diligence. Trade credit insurance providers can conduct due diligence on potential new customers, assessing their creditworthiness and providing advice as to whether the organisation should do business with them or not.

4. Financiers prefer it. Organisations looking to secure finance to expand will be well-served by having trade credit insurance in place, as it reduces risk for financiers.

5. It softens the blows. Factors outside the organisation’s control, such as economic slowdowns or natural disasters, can affect its customers’ ability to pay. Trade credit insurance softens the blow from these situations, letting the organisation continue to operate safely.

6. It lets businesses focus on growth. Trade credit insurance providers can also help collect unpaid debts, leaving the business’s staff free to pursue more valuable activities that grow the business.

Source: www.dynamicbusiness.com.au