Protect your Business Against Client Bankruptcy
Are you adequately protected against clients who go bankrupt?
In a perfect world, business owners who do the right thing by their customers would not be adversely affected by their customers’ financial circumstances. Unfortunately, this is not the case.
When you offer credit to your customers, you are automatically assuming some of their financial risk. Every year, many businesses are caught out by the financial hardship of their customers, particularly if that customer represents are large portion of their expected revenue.
However, you can protect yourself. Credit Insurance is the easiest and simplest way to ensure your business operations can continue undisrupted, regardless of the financial health of your clients. It can also support any plans you have to expand your business, or extend additional credit to win new business.
Also known as business credit insurance, trade insurance, bad debt insurance and accounts receivable insurance, this insurance will cover you in the event of one of your creditors not meeting their financial obligations to you. The key benefits of credit insurance are outlined below.
Cash flow and profit protection
Credit Insurance will protect you against insolvency of your customers including bankruptcy, liquidation and administration. It also covers you for non-payment if your customer disappears, cannot be located and/or you receive a court judgment in your favour.
Ability to grow your business
The opportunity to grow your business will usually bring with it additional financial risks. Expanding into new markets, adding new products or extending large credit amounts to new clients requires additional capital investment and risk.
With credit insurance, you can take on more financial responsibility, secure in the knowledge that your current debts will be paid.
Debt collection services
Many policies include a free debt collection service. If a debtor doesn’t pay on time, a professional debt collector will recover the funds on your behalf. If the case needs to go to court, part of your legal costs is also often covered as part of your policy.
Ongoing credit management
When you take out credit insurance, your policy provider will calculate your premiums based on your own credit limits and practices, as well as the credit worthiness of your customers. Not only does your policy provider look at customer credit histories, but they also provide ongoing reports which can keep you up to date on the financial strength of your debtors.
Strengthen your borrowing power
Anytime you are looking to secure a business loan, financial institutions want to ensure you are in a strong position to honor your repayments. By having credit insurance, you demonstrate that your accounts receivable are secure and protected.
When you invest in credit insurance, the added security and confidence these policies provide will enable you to protect your cash flow, secure business loans and be in a position to offer larger amounts of credit to new or existing clients.