Protecting Your cashflow – debtors insurance
We all know owning and running a business can be stressful enough as it is. Managing employees and day-to-day operations, keeping track of finances, and handling the day to day challenges can seem never ending.
These stresses pale into insignificance when after finally completing the elusive sale, your customer/client doesn’t pay you! This scenario has destroyed many a business. With our help we can help to protect your business from the risk of your customer going under owing you plenty.
What Exactly Is Trade Credit?
Trade credit insurance, also known as debtor’s insurance, protects your business against your customer or client failing to pay for the product they ordered. There can be many reasons why this might transpire however the only point that is relevant is how the non-payment impact the finances of your business
Without this cover, when goods are provided to your customer prior to payment being received, your business is taking on the risk of non-payment. There is always potential that your customer will be unable to pay and effectively you are providing an unsecured loan to your customer. Trade credit insurance removes this risk.
Your customers can continue to purchase goods from you on normal credit terms, as each customer is assessed by the insurer regarding their financial stability.
Trade credit insurance will help to keep your business afloat. The insurer will compensate you for the failure of your customer to pay for their purchases, thus ensuring you are able to continue to operate your business, meet your own commitments and avoid all the stresses those issues can bring.
One of the other benefits of holding this cove is that your own business is considered to be a better risk which can be very relevant if you are seeking finance from an institution, as an insured debt can be counted as an asset rather than a debt.