Sales Growth and Profitability
Credit insurance policies offer a range of business benefits, however a key area of interest to many of our clients is the support it can offer businesses to grow sales and improve profitability.
As well as guaranteeing payment of invoices and giving better credit control, businesses with credit insurance will naturally experience improved profitability and sales growth, and will also be supported to accelerate this benefit.
A company has an annual turnover of £5million of which an average 20-25% will be due at any one time.
One debtor has invoices totalling £100,000, of which £25,000 is at 90 days.
Scenario A: Your money is tied up with your customer
The debtor is reliable and continues to pay at 90 days; up to £100,000 will be tied up with your customer and £50,000 will be months away from payment.
Access to a credit control team through your Channel Partnership credit insurance policy will support with better credit control, speeding up payments and releasing at more of your hard-earned cash back into your business.
Scenario B: Your customer’s circumstances change
Problems within your customer’s business mean that they may become overstretched in the future.
Your credit insurance policy through The Channel Partnership will offer credit management insights, enabling you to reduce the amount of credit that you extend to a customer, to an appropriate, manageable level. For example, reducing credit from £100,000 to £75,000. This reduces your likelihood of non-payment.
Scenario C: Your customer becomes insolvent or bankrupt.
No business is completely watertight and the unexpected can happen.
Should your customer be unable to pay, your credit insurance policy through The Channel Partnership guarantees payment, meaning that you can continue to trade without ill-effect. The average policy will cover 90% of the debt, reducing your liability from £100,000 to £10,000.
As well as the direct sales and profitability benefits obtained through having a credit insurance policy, sales and profitability can also be improved through better financing deals, presenting your business as a lower-risk one simply by having a credit insurance policy, at the same time enabling you to free-up reserves for re-investment previously held to protect against bad debt. Both of these aspects will support your investment in your business for growth and then good credit management insight will help you to identify stable potential customers to approach.
Using Credit Insurance to grow your business