Even the most disciplined credit management procedures cannot prevent a bad debt, any business that provides goods and services on a credit basis, have an exposure, the results of your reference and credit checks should enable you to set appropriate credit limits and payment terms for each customer. In addition, trade credit insurance, or credit insurance, provides your business with protection against the failure of your customers to pay debts and substantial delays in receiving payments.
Commercial risk refers to the failure of a buyer to pay its trade credit debts within the agreed credit period, whether due to temporary financial problems or insolvency, simply complete your details and one of business specialists (who are available six days a week) will have to be in touch to understand your requirements, by the same token, also, your business credit scores and ratings may influence what you pay for required insurance and how favorable the terms and conditions of contracts are for your organization.
An insurance endorsement is a good way to add extra coverage to your insurance policy or make a change without having to request a whole new policy and may provide other benefits for the policyholder, premiums are calculated by applying a rate to turnover of the business (or the turnover relating to the selected accounts). But also, bad debts are the biggest losses of any business and can take away the whole of the profits of your organization.
What may seem catastrophic at first is completely bearable with adequate trade credit cover, it can make up the shortfall so you can still make the payments required to keep your business operating even if your customers have let you down. And also, having a good credit rating show is that your business pays its debts on time and, therefore, the risk of default in payment is minimal.
With coverage in place, you can conduct business as usual with the added benefit of value credit analysis and collection services, one of the benefits of a written policy is the fact that it will reduce bias and subjectivity in the credit decisions being made, then, most trade credit insurance policies provide comprehensive credit coverage which covers policyholders for the non-payment of accounts receivables subject to express exclusions.
There is a direct correlation between the terms of credit and the sales generated by the supplier, equally, for small business owners, the greatest benefit of trade credit is the opportunity to greatly reduce or even eliminate the dip in cash flow between when you purchase inventory or supplies from a wholesaler and when you can make up that expense with sales revenue.
You work with businesses and individuals safe in the knowledge that you have the skill set to make a real difference by adding value through your partnership approach, suppliers and vendors also reap the advantages of trade credit extended to customers. As an example, whenever a supplier allows a small business to delay payment on the products or services it purchases, the small business has obtained trade credit from that supplier.
As with any stage of your business, you are at your service with products and services to balance your collections and payments, and provide a regular and effective cash flow, give you a call and consider what you think you need, your business is broader than the list. Equally important, once you have the credit application in hand you need to verify the information it contains.
Want to check how your Trade credit insurance Processes are performing? You don’t know what you don’t know. Find out with our Trade credit insurance Self Assessment Toolkit: