Trade Credit Insurance, or just Credit Insurance, provides businesses with vital protection against non payment of invoices for the sale of goods or services, both in domestic and export markets.
However rather than asking ‘what is credit insurance?’, to see the bigger picture we should be asking ‘how can credit insurance benefit my business?’. In the event of a customer’s insolvency or payment default, Credit Insurance gives you swift access to replacement capital without harming your balance sheet. As well as protecting against the potentially catastrophic effects of bad debts, this type of business insurance also brings with it many other benefits. Some of these are:
- Good quality information to make informed decisions when granting credit to customers
- Access to finance facilities, such as Invoice Finance and Factoring, is greatly improved owing to the extra security afforded by a Credit Insurance policy.
- The option to include pre-legal and legal collection of defaulting debtors, often included within the premium, to help with slow paying customers for both insured and uninsured debt.
- Removes the need to keep bad debt reserves, meaning these funds can be put towards other uses.
- Optional bespoke types of cover for industries such as Construction, Advertising and Recruitment to cover risks such as binding contracts and work in progress.
Insurers have access to both credit information sources and collection companies / lawyers providing a network of local experts. This, particularly for exporters, provides resources not readily available to many companies. Political risk cover can also be included for exporters selling into politically sensitive markets. This includes risks relating to contract frustration cover, currency inconvertibility, moratorium, public buyer default and removal of import / export licenses.
In short, Trade Credit Insurance is a straightforward way to ensure that you get paid for the goods and services you supply. So whether you are looking into Credit Insurance to support funding, have a greater understanding of your customers financial position, or to just protect your company from bad debt, Acumen Credit Insurance are here to help.