Do You Need Trade Credit Insurance

Cash flow issues are some of the most common reasons why companies may fail to boost their revenues. Recent studies have shown that Australian companies are among the slowest in settling invoices. The increased volatility in domestic and international trade shows that it is now more crucial than ever to ensure that your capital and business revenues are adequately insured against commercial and political risks.

Niche Trade Credit has been helping small, medium, and large organisations across various industries protect themselves with trade credit insurance or export insurance. How do you know whether trade credit insurance is right for you? Or do you need trade credit insurance at all? Here’s how an export insurance policy can protect your business and grow your customer reach.

How Trade Credit Insurance Works

If you sell products and services on credit, your business’s cash flow is affected if your customers default on payment. No matter how best you manage your company, you have no control over what happens to your customers. They can experience currency manipulations, political instability, or cash flow issues that can quickly affect their ability to pay. A trade credit insurance coverage can help protect your company from these unforeseen financial problems.

A trade credit insurance coverage operates by safeguarding your business’ account receivables. Your policy can cover part or all the accounts depending on your business goals and needs. The coverage also aims at protecting you against unpaid invoices and bankruptcy.

Does a Trade Credit Insurance Policy Only Offer Risk Management

Trade credit insurance can offer several benefits besides protection from catastrophic losses. It can be used as a sales product or a financial tool.

  • Financial institutions acknowledge that loan repayment can be affected by the business’s key debtors’ bankruptcy or insolvency. For this reason, companies covered under export insurance obtain appropriate lending terms.
  • Trade credit insurance can help your business trade more goods and deliver more services on credit terms. The coverage can help you leverage cyclic or ideal selling periods and grow your reach into new markets.

Should You Continue to Rely on Self-insurance?

Self-insurance against bad debts has proven to work in the past. However, relying on self-insurance is too risky, particularly in the current competitive global economy. Credit insurance gives your business better funding access and allows you to grow your customer base. Additionally, your export insurance premiums are tax-deductible. Self-insuring with bad debt reserves does not offer you these added perks.

How Niche Trade Credit Can Help

At Niche Trade Credit, we have helped businesses find the best insurance solutions that work to suit their goals. When you reach out to us, we will work towards helping you find a trade credit insurance policy tailored to your needs. Contact us today to get assistance from one of our export credit insurance experts.

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