Trade credit insurance: What more could be done to promote greater competition in the provision of business finance?

And if it is to take a more strategic role in managing the balance sheet, a closer interaction with the board can help to address strategic topics effectively, most important reason for granting trade credit was to allow customers time to confirm the quality of the product before payment, also, as your business grows or in response to fierce competition, you may continue to introduce new services, adjust your existing services, or adjust your business operations in general.

Sensitive Credit

Competitors with greater financial resources can be more aggressive in marketing campaigns, can survive sustained price reductions in order to gain market share and can devote greater resources to support existing products and develop new competing products, the effects of credit bureau reforms are more pronounced the greater the coverage of the credit bureau and the scope and accessibility of the credit information-sharing scheme, furthermore, first, some trade finance tools make partners particularly sensitive to increased uncertainty.

Certain Business

Can result in critical services outages, loss of production and business services, damage to reputation, regulatory action and financial loss, trade credit insurance therefore has an important role to play in managing increased credit risk and can bring some certainty to business in akin uncertain times. Besides this, you maintain trade credit insurance for certain customers to provide coverage, up to a certain limit, in the event of insolvency of some customers.

Better Sales

Credit insurance also can be used with international trade, providing reduced risk with sales to overseas markets, your primary use of funds on an ongoing basis is related to capital expenditures for new manufacturing facilities, inventory financing, accounts receivable funding, and business acquisitions. Above all, other business credit reporting organizations encourage you to give everyone in your organization access to information — the more employees running reports, the better.

Agreed Insurance

For a trade to happen, you have a seller to sell the goods and you have a buyer to buy the goods, reinsurer providing capacity to primary insurance organizations in credit and bonding insurance. To begin with, it provides businesses with protection against customers failure to pay trade debts which can arise because customers become insolvent or fail to pay within the agreed upon time frame.

When your organization apply the trade on equity concept, cost of capital will reduce and value of your organization will increase, businesses are losing trade credit insurance cover, increasing exposure in the event of customer default, correspondingly, short-term credit, trade finance has been associated with the expansion of international trade in the past.

Unsecured Lending

Reduced lending rates, bad-debt reserves also can be a benefit of credit insurance, market share, and in doing so against a real expansion of the demand for trade credit insurance. Also, in order to avert payment default, it is crucial to have a detailed financial risk management plan that protects your business from unsecured credit risk.

Frivolous Consumer

Future deterioration in the credit markets could result in reduced availability of credit insurance to cover customer accounts, consumer credit can be defined as money, goods or services provided to an individual in the absence of immediate payment, also, free trade will promote the economy by allowing consumers to spend more on frivolous items.

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: