According to analysis of insolvency data from the last twelve months, more than 90% of trade credit is uninsured, costing trade creditors an average of £450,000 per insolvency. More than half of the £80million of bad debt which occurs every week is owed to ordinary trade debtors, and each individual bad debt has a per creditor average value of £24,000. It has also been found that of the trade creditors who face these bad debts, 20% will face insolvency themselves without external capital investment, should they have to endure a £24,000 unsecured loss. Despite being at a six-year low currently, the annual total for unsecured credit losses is just under £4billion.
It is also believed that the majority of these losses would have been insurable, leaving businesses facing unnecessary losses which could easily have been recovered through insurance.Insurance against the risk of bad debt, even if a business has not experienced significant bad debt to date, can be crucial for maintaining and securing a business in the face of unexpected losses. It can also be a viable, valuable alternative to maintaining business cash reserves specifically to offset bad debt, enabling that cash to be used for increased investment and expansion opportunities within the business.
If you are interested in finding out more about credit insurance and securing your business against business insolvency, please contact us on 01275 817320.