The benefits of trade credit insurance are obvious. Or are they?
Trade credit insurance protects your business against the risk of bad debts. But wait – it does so much more!
We work with owner-managed SMEs like you to help you gain maximum return on the cash you invest in your trade debtors. Trade credit is essentially the oil in the wheels of B2B trade. Good management of your trade credit risk is a key challenge but also an opportunity.
Trade credit insurance also:
- supports “best practice” credit risk management processes and procedures
- helps improve your business reputation and stability
- frees up cash from bad debt reserves that can be put to better commercial use elsewhere in your business
Sounds great, right?
Here are some benefits in a bit more detail which we think makes taking out a ‘good’ credit insurance policy a no-brainer.
- Increased profitability & growth. Not only does a credit insurance policy protect you against the risks of non-payment, it can also release vital reserves, previously used to safeguard against bad debts, which means more money for reinvestment. As an added bonus, the advice and support that you receive with your policy will help you to make informed decisions about the customers you work with, so you can avoid any dodgy characters. The security of credit insurance may also allow you to bid for bigger contracts and allow higher levels of credit more quickly.
- Improved insights & risk management. Credit insurers have access to information not in the public domain so that levels of credit insurance reflect real time risk. This isn’t just about preventing you from working with businesses that have poor credit ratings – it’s also about ensuring you extend appropriate credit to each of your customers, and will help you to identify new customers to pursue as well as potential markets you can expand into.
- More favourable finance terms. Credit insurance guarantees that your insured debts will be paid, even if your customer is insolvent. It will also support any applications that you make to finance facilities (including banks for expansion loans) or invoice finance and factoring companies. The extra security of a credit insurance policy should mean that you more likely to be accepted, and that the credit terms should be more competitive.
- Better payment terms with your customers. Your policy can grant access to a credit control team and experienced debt collectors, improving the frequency of customer payments. This means faster payments from traditionally slow payers, giving you more cash within the business at any one time. Ideal.