Trade credit insurance protects your business against unpaid credit debts and customer insolvency.
In this article, we take a look at Fire Plus, a genuine SME, and discuss what happened to them when they were hit with an unexpected loss of $200,000!
Fire Plus provides a significant line of credit to some of its key customers. Fire Plus bought a Trade Credit Insurance policy to protect them against bad debts or the insolvency of their customers who enjoyed the line of credit.
Just over 6 months into the policy, disaster struck. Liquidators were unexpectedly appointed to one of the key customers of Fire Plus leaving an outstanding debt owing in the order of $200,000.
A loss of this magnitude for a small business with a turnover of less than $2 million could have resulted in a disaster. However, Fire Plus had made the wise choice of buying credit insurance, amongst other things, to protect their liquidity and cash flow. Fire Plus were reimbursed 90% of the loss after deducting the $5,000 excess. The net reimbursement to the client was $175,500.
Without credit insurance, it is difficult to see how Fire Plus would have survived. Credit insurance not only protects businesses, it quite often saves them.
Allsafe Insurance offers Trade Credit Insurance for businesses so that they can be assured that they are covered if or when the need arises. Financiers will also look very favourably at businesses who transfer this risk to insurance.
Talk to us if you need more information on how Trade Credit Insurance can help your business.
