The benefits of trade credit insurance

You can expand your business with trade credit insurance. If your business is successful, you can have more faith in the future. Your staff will remain motivated. Growth is not without risks. You run the risk of your customers not paying their bills.

Credit insurance covers the efficient transfer of risk about customer defaults, such as those resulting from insolvency or prolonged payments. Trade credit insurance Australia is a way to make sure that you are not exposed to this risk.

Credit insurance is not only for bad debts but also improves internal processes and procedures. This can lead to better relationships with clients. You can also increase your negotiation power with different stakeholders (banks leasing companies, suppliers, etc.). The credit rating of an insured business improves. Credit insurance is a way to transfer the risk of customers defaulting on payments due to insolvency or prolonged payments. Credit insurance doesn’t just protect against bad debts.

Trade credit insurance benefits all businesses

Businesses, big and small, in all sectors, might face default. The payment behavior of customers can change even in good economic times. A long-standing customer relationship does not guarantee that they will pay you as expected. The future can be unpredictable and default can take many forms.

Here are 9 benefits to trade credit insurance

Better relationship with your customer because credit insurance allows for more customer-friendly payment arrangements, thanks to guaranteeing coverage’s

More financial space to reduce your debtor risk.

Get more information on the creditworthiness of your customers and prospects.

More favorable banking conditions, often at lower rates, because insured claims are converted into collateral for banks and contribute towards a higher level of funding.

Competitive terms, due in part to a longer delay on payments, also from abroad, so that trade cans (more) are done on the foreign market.

Secure business abroad at lower cost and with less red tape

Increased growth among key clients, with maximum-backed delivery. Thanks to a simple approval process for credit limit limits.

Effective, efficient worldwide debt collection allows you to rest well knowing that your risks have been taken care of and that your payments will be made on time.

Improved payment behavior Customers pay on average 5 days earlier if you have credit insurance. Hence, impacting positively your liquidity.

Credit insurance not only provides peace of mind but also offers the following key benefits:

Protect yourself against catastrophic losses

Receivables are among your most important and highest-risk assets. Credit insurance covers against possible bad debt losses and provides a safety line.

Safe sales expansion

Credit insurance is a great way to expand your business. Credit insurance can help you grow your business safely, regardless of whether you are looking to increase credit lines for existing customers or to offer open credit terms that are competitive to new accounts. See a real case study from one of our clients.

Increased Borrowing

Credit insurance can offer cost-effective access to working capital that can allow you to grow your business and avoid cash flow problems. Your credit insurance policy will help you maximize working capital availability from any receivables you have pledged to your lender. The majority of ineligible accounts, which includes receivables that are concentrated with only a few accounts, can now be included with your lender’s borrowing base. See a real case study from one of our clients.

Support for credit decisions & information about your customers

You are not only buying credit insurance coverage for your receivables. Credit insurance can give you valuable market intelligence regarding the financial viability and trading risks of your buyers. See a real case study from one of our clients.

Allows companies to reduce their bad-debt reserve

Credit insurance will help you lower your bad credit reserve and allow you to manage write-offs more effectively. You can reduce the bad debt reserve by this amount and turn excess bad debt reserves into income. This will improve earnings, shareholder equity, financial ratios, etc. Credit Insurance premiums can be deducted from taxes, but your bad debt reserve cannot.