Bad debt strategy – Mike Hallam, Head of Technical Services at the British Insurance Brokers’ Association (BIBA), has issued an article whereby he highlights why firms can’t afford to evade a conversation about Trade Credit Insurance.
Recent years have seen stability in the number of business failures which has lead to companies trading without the assurance of bad debt cover. However with worrying pointers that businesses are now struggling to stay afloat and high profile insolvencies of the likes of Monarch Airlines, Misco and Palmer & Harvey, Mr Hallam indicates many risk managers are now reviewing their strategy on debt protection for their business.
Other elements are contributing to the relevant bodies forecasting a change in the environment, including the state of the economy, uncertainty from various global situations and a reversal of the low level of insolvencies experienced, between 2010 and 2016, with a recent increase in voluntary liquidations. These flags should be serving as a catalyst to companies to stress test their business in case they are hit by bad debt without the support of credit insurance.
Mike Clark, Chair of the BIBA Trade Credit Working Group, delivered a warning when commenting on the current climate: “Recent statistics from the Insolvency Service showed a 15% increase in company insolvencies for Q3 2017 which is troubling. The prospect of higher UK interest rates, uncertainty over Brexit, the impact of more restrictive US trading policies and even political uncertainties in Spain are reasons why companies of all sizes might want to consider reviewing the ways they can mitigate their exposure to bad debt.”
Trade Credit Insurance protects businesses from bad debts caused by default of a business customer or the insolvency of companies such as furniture chains Multiyork and Feather & Black.
If you are looking to review your strategy on how you protect your business against bad debt, Acumen, as specialist brokers, can arrange bespoke credit insurance policies to suit your business and trade sector, contact us today to find out more.