Trade Credit Insurance
Trade Credit insurance is not compulsory. It is however a crucial cover with which you can protect your company and it’s debtor list.
Consider the cash flow problem that an unexpected bad debt (caused by either the insolvency or default of one or more of your customers) would cause.
Companies may fail because one major buyer defaulted on them - either through the buyer’s own failing finances or the domino effect on them of a customer further down the line failing.
It is this potentially catastrophic situation that Trade Credit Insurance is designed to avoid. The product is aimed at companies who:-
- Trade business-to-business on agreed credit terms
- Have a spread of customers whose individual or collective demise would cause a real problem
- Have proper credit control systems in place
- Want to increase and expand their customer base (both Domestic and Export) on a finally secure basis
- Feel it is important to present their company in the most positive light to their bankers
By effecting this insurance, you are placed in a stronger position to develop and grow with confidence.
Of course, Trade Credit Insurance doesn’t suit every circumstance, for instance:
- Companies who may have a ledger made up of numbers of small, retail customers. The loss of a few of these wouldn’t be catastrophic - merely a cost of doing business.
- Companies who have one huge customer. If they disappeared, would the business till be viable?
- Companies who make a habit of trading with uncreditworthy buyers at premium prices. Like all insurance, Trade Credit Insurance is designed to protect against the unexpected - not the inevitable!
A quote for Trade Credit Insurance commits you to nothing and will highlight in detail the many benefits of this protection, how much do you really know about your customers’ ability to pay?