August17 , 2022

Trade Credit Insurance-Benefits

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A business’ biggest asset is its accounts receivable. Credit losses can pose a significant threat to your business if customers are unable or unwilling to pay. Trade credit insurance is also known as credit and export insurance. It’s a form of insurance that transfers risk to companies that need to protect receivables.

Trade credit insurance policies are designed to fit your needs. They offer several important benefits.

Higher Sales

Trade credit insurance services helps businesses increase their sales by offering more favorable terms for customers and prospects.

Access a new market

Trade credit insurers offer protection from unique export risks by providing market knowledge to help businesses make informed decisions in foreign countries.

Insolvency protection

Trade credit insurance protects companies from customer defaults or insolvency by covering sales made on credit terms.

Cash flow relief

Trade credit insurance is a cash flow protection that provides cash flow relief if a business’ customers become bankrupt or don’t pay their bills. You can insure losses to help you maintain your cash flow.

Reduce concentration risk

Trade credit insurance helps businesses that are dependent on certain customers to reduce risk.

Accounts Receivable Support

Trade credit insurers allow businesses to access professional trade-credit analysts who will share their best practices and knowledge with the company’s credit department.

Services

Trade credit insurance allows you to access cost-effective collection services.

Facilitate bank financing

Banks will often offer better terms for businesses that insure their receivables.

Portfolio monitoring

Trade credit insurance gives customers access to professional portfolio managers who monitor their ability to meet financial obligations to the company.

Benefits of credit insurance

Protects you from bad credit

Identifies potential losses

Access to the key credit analysis of your client’s sector and political risk from their insurers gives you invaluable insight to help prevent losses.

Transfers risk to the balance sheet of an insurer

Credit insurance removes credit risk from the balance sheet. This increases your margins and helps to boost your P&L.

Reduces bad debt provision

As long as you can cover potential losses, you can reallocate excess bad credit provision as working capital.

Enhances working capital

Facilitates financing access

Credit insurance can raise your credit rating, allowing you to get better and more affordable levels of finance.

Balance sheet engineering

To make your working capital more available, you could use the debtor assets on your balance sheets to unite invoice discounting and factoring.

Affordable security provisions

Credit insurance can replace expensive bank letters and guarantees.

Embeds credit management disciplines

This allows companies to extend credit terms

Because your shipments are covered by insurance, you have no fear of not getting paid. This allows you to offer customers longer payment terms, which will give you a competitive edge in your industry.

Stimulates credit management processes

Credit insurance policies have several disciplines. These are designed to support best practices and sound credit management, strengthening and enhancing existing processes.

Access to analysis and credit risk expertise

Support is available to help you establish credit limits on customers and manage recoveries and salvage if there is a claim.

Supports business growth

Sales growth promoted while maintaining control

Credit insurance allows you to provide payment terms for customers in all markets, new and old.

Directs and supports sales to higher-margin markets

Sales to high-level margin markets require support from top or key accounts.

Supports mergers, acquisitions

Credit insurance protects companies that invest in credit, including against bad debts arising from customer portfolios that have been acquired or merged.

 

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