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Trade credit insurance’s role in uncertain times


Amid uncertain political and economic headwinds,

Atradius’s Tanya Giles outlines how trade credit insurance can provide some peace of mind.

A decade on from the global recession, 2019 could develop into a year of promise, or the continuing uncertainty engendered by the Brexit debate could further dampen opportunity. Already in the first quarter of the year, the challenges facing the commercial environment are mounting.

While the UK teeters on the cusp of Brexit, US-China relations deteriorate with the risk of an impending global trade war and a hard landing for China – a destination once seen as a lucrative target for export growth. Change has become the norm and uncertainty the only certainty as we look towards the future.

In the UK, the continuing uncertainty has weighed heavily upon the economy. Both business and consumer confidence has been knocked, growth has eased and insolvencies are, once again, becoming an all too common occurrence. The pattern can at times feel like a carousel, repeatedly coming back to the same place and re-presenting problems that we are all too familiar with. The biggest question for business is, of course, “what’s the solution?”.

With uncertainty clouding the horizon, the challenge is to effectively futureproof the credit strategy for your business and manage risks that seem so impossible to predict.

The key is “information”. At Atradius, we’ve always said that knowledge is the bedrock of sound trade and never before has this been more pertinent. In the current climate, you cannot rely on old information. Constant monitoring, analysis and live updates can be the difference between making a successful credit decision or one that is destined for failure.

It’s not enough to credit check a potential new customer; you need the inside track on their financial affairs, trading strategy, payment behaviour and even an insight on their approach to risk management and whether there is a contingency plan should they hit troubled waters. In today’s trading environment, businesses are hungry for this level of detail but often don’t have the resource required to continually review and update what has become the essential inside track.

Enter Atradius. We have access to the right information alongside cutting-edge tools, real-time insights, unrivalled expertise and decades of experience enabling customers to make the right business decisions. Credit insurance was first introduced in the UK a hundred years ago, aiming to support businesses to trade after the First World War. Today, Atradius continues to fill that role – although a lot has changed, the fundamental principle to enable trade remains steadfast.

One of our primary roles is to pay claims should a customer fall victim to non-payment and is often why a business chooses to insure. The relief of a claims payment can prevent the contagion from an insolvency spreading along the supply chain and keep a business alive. To that degree, trade credit insurance has always been a solid backstop; at least you know that should your customer fail, your cashflow will be protected. However, there can be more headaches from a failing customer than non-payment.

The good news is that we are in a new era for trade credit insurance. At Atradius, we’ve become an intrinsic part of our customers’ business by being involved right at the very beginning of a trade journey and in the development of robust credit and risk management strategies.

With the right resource, business intelligence and expertise, we can steer our customers away from risk, help them identify opportunities as well as mitigate against the potential risks they may face. In doing so, we’ve genuinely become a trade partner to business. It’s why we have experts on the ground around the world, reporting back information and providing unrivalled insights and advice to customers. As risks change every day, we stay on top of payment behaviours and are alert to any signals that indicate financial weakness. One of the tactics to achieve this is to develop close working relationships with our customers’ customers.

Working together, being transparent and sharing information allows us to make informed and accurate credit decisions. We proactively work with the firms that buy from our customers to be sure that we have accurate and up-to-date information about them that enables us to provide cover and facilitate trade wherever possible.

In evidence of this, we’re seeing more and more businesses turning to trade credit insurance for protection and that interest drives us to be more prepared, responsive and agile than ever before. It’s why we are continually working to enhance our offering and maximise the efficiencies and opportunities that technology brings. This includes creating a new credit management portal so customers can manage policies and apply for new credit limits from any place at any time.

We’re also developing new partnerships, ways of working and tweaking our policy suite to ensure that cover options are more accessible and appropriate to customers’ changing needs. A good example is our Modula Freedom policy, which has been developed specifically to match the needs of SMEs. Trade credit insurance is so much more than an insurance to stick in the filing cabinet for a rainy day and should not be seen as a ‘nice to have’ – it is an essential business tool that adds value from day one.

Trade credit insurers are well accustomed to identifying, analysing and mitigating risk. Therefore, responding to today’s challenging risk climate is very much business as usual for Atradius; it’s all part of our job. We are not only committed to delivering a first-class service but we want to make it our business to deliver value by enabling trade and helping customers to build strong foundations to deliver future growth. Any market has the potential to be defined by its risks but the difference between success and failure is how these risks are managed – and therefore reduced – in order to bring financial reward.