As well as protecting businesses against client payment defaults, insolvency and bankruptcy, trade credit insurance can provide a secure way to grow your business.
In this article, we take a look at what trade credit insurance is, why you need it, and how it can help you expand your business.
What is Trade Credit Insurance?
In short, trade credit insurance is a risk management policy that helps your protect your accounts receivable. When you sell goods and services on credit, rather than on cash terms, you expose yourself to the risk of non-payment by your customers. Trade credit insurance takes away that risk and protects you from writing off non-payments as bad debt.
Who Benefits?
Large, medium and small businesses can all benefit from taking out a trade credit insurance policy. It’s also especially helpful if your business concentrates on a few key customers for the majority of its sales.
How Can It Grow My Business?
Trade credit insurance gives businesses the confidence to offer credit to new customers and grow their client base without putting their business at risk. Some of the advantages of investing in trade credit insurance include:
- An expanding client base
- Enhanced customer relationships
- Improved access to funding for business expansion
- A stronger relationship with your bank
For example, banks sometimes look more favourably on businesses who transfer their client risk to an insurance company. As a result, you may be offered more competitive interest rates. If you have trade credit insurance, you are also more likely to be offered a loan by your bank because they know that they will get their money back.
Expand Your Sales
Sales expansion is sometimes only possible with trade credit insurance. If your business is considering selling its products internationally, trade credit insurance can mitigate the risk of establishing new foreign markets to increase export sales. This builds stronger customer relationships, as well as providing the necessary protection for your business. Looking for an insurance policy to protect and grow your business? Call AllSafe on 1300 908 404, or contact us today to find out more about our trade credit policies.
General Advice Disclaimer The information in this article is to be regarded as general advice. Your personal objectives, needs and financial circumstances were not taken into account when preparing this content. We recommend that you consider the suitability of this general advice, in respect of your objectives, financial situation and needs before acting on it. You should obtain and consider the relevant product disclosure statement and Financial Services Guide from Allsafe Insurance Brokers before making any decision to purchase a financial product.
