Benefits of Trade Credit Insurance

May 20, 2022

Accounts receivable form a critical aspect of any business. If your debtors cannot pay what they owe, your business risks incurring significant trade losses. Trade credit insurance or export credit insurance is a form of insurance coverage that allows you to safeguard accounts receivable from the risk of nonpayment. Export trade credit insurance policies are created to suit the needs of any business and offer several benefits.

What are the benefits of Trade Credit Insurance

  1. Access to Funding – Banks look favourably upon organisations with trade credit insurance and may provide extra funding to enhance the growth plans of these companies. If you want to use invoice finance, your financing company can get the security required to help you access additional funding. Besides, banks and other lending institutions may also lower the prices of funds to companies with insured receivables.
  2. Get Warning Signals and Information about New and Existing Customers – Trade credit insurers will monitor your debtors consistently to evaluate your organisation’s creditworthiness. The insurers can quickly obtain the credit rating of debtors and give you warning signs to avoid future risks and losses. This means that you can now operate your business with more confidence.
  3. Penetrate New Markets – Selling goods on credit may not be easy, mainly if you’re operating your business overseas. A trade credit policy allows you to quickly establish and maintain a business in new geographies since you will rest assured that your insurer backs you.
  4. Cash Flow Relief – Trade credit insurance protects your organisation’s assets from cash flow fluctuations, particularly those caused by unpaid invoices and bad debts. Unpaid invoices can result in insolvency, making it challenging for the organisation to bounce back to operations.
    Your business will have a safety net with a trade credit insurance policy since the insurer will issue indemnification of unpaid invoices. Therefore, if a debtor fails to pay what they owe, you can continue running your business as if they had paid.
  5. Legal Assistance – If a debtor fails to pay, the trade credit insurer’s legal recovery team will step in to try and recover the outstanding balances. This way, you can eliminate the need to hire “after the event” debt collection companies. Trade credit insurance legal teams understand how the legal recovery systems operate in various jurisdictions.
  6. Boosting Sales – Trade credit insurance policies can help your business grow and expand seamlessly. It enables you to improve your credit line with existing customers and ensure that you can smoothly continue operating your business despite debt nonpayments.

Contact Niche Trade Credit Today

At Niche Trade Credit, we acknowledge that most businesses fail due to a lack of working capital and failure to recover money owed by debtors. We will reduce risks with our trade credit insurance solutions since we can easily flag issues before they get out of hand. Call (02) 94160670 to schedule a free consultation and learn more about how we can help your business with effective credit management.

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