3 Reasons Trade Credit Insurance Is Critical For Small Businesses

December 31, 2018

3 Reasons Trade Credit Insurance Is Critical For Small Businesses | Niche Trade Credit Sydney

Whether you run an importing and exporting company, or even a domestic small business in Australia, trade credit insurance can be a powerful way to protect your small business, and streamline your credit management processes.

Essentially, trade credit insurance is used to protect you when you sell goods and services on credit, and avoid bad debt, or non-payment due to protracted default. You can insure your unpaid invoices, and if your customer fails to pay on time, you can be compensated for the value of this invoice by an insurance broker.

  1. Protect Your Business And Your Profits

Firstly, getting a trade credit insurance policy allows you to protect your small business from customers who do not pay for your goods or services. This is particularly important for businesses who operate overseas in developing countries, or if you typically sell your goods and services only to a small handful of clients.

Even if your credit terms, such as net 30 days, are not met, you can be compensated if your client fails to pay, which ensures your company is not put out of business by a customer failing to pay.

  1. Ensure Uninterrupted Cash Flow

If you’re extending credit limits to your customers and they are not paying on time, this can cause serious cash flow issues, which can harm your ability to grow your business. You may not have the funds you need to expand until your customer pays – and if they fail to do so, your plans could be derailed entirely. A trade credit insurance policy can help you avoid this situation.

  1. Provide More Services On Credit, And Expand To Developing Nations

Because your invoices are insured, you can provide more services and goods on longer credit terms, depending on the credit worthiness of your partners. This allows you to bring in more customers. Even if a customer has difficulties paying on time, you can rest assured that you’ll be compensated, giving you valuable peace of mind.

And, when combined with political risk insurance, trade credit insurance makes it much less risky to work in a developing nation, where instability and currency issues could otherwise pose a high risk to your continued profitability. This allows you to take advantage of more business opportunities, and expand your company.

Got Questions? Ask Niche Trade Credit!

If you aren’t sure if a trade credit insurance policy is right for you, and you’d like more information about what the policy covers, and how it can benefit your small business in Australia, we’re here to help.

You can contact Niche Trade Credit now online, and get more information about our trade credit insurance services and political risk insurance products. We’re always happy to hear from a potential customer, and discuss our products and services in further detail, so get in touch now!

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