Most business owners want to grow their sales and profits, acquire larger clients, and expand into new territories.
But achieving this growth comes with greater financial risk that can leave you vulnerable to financial losses and even bankruptcy.
What many business owners don’t know is that you can reduce and manage your risk levels with credit insurance.
What Is Credit Insurance?
Credit insurance protects your business from financial loss arising from non-payments of accounts receivables. Put simply if you provide products or service on credit (meaning you get paid at a later date) and that customer does not pay, then your credit insurance will reimburse the outstanding debt.
There are many reason why this might occur such as when a customer…
- Goes bankrupt
- Becomes insolvent
- Skips town
- Or simply refuses to pay
When growing your business this type of protection and financial certainty becomes even more important for a number of reasons.
Allows You To Extend Greater Credit
As you try to attract bigger and more profitable clients you may need to offer better credit terms to secure their contract. If one of these contracts were to fall through or there was a delay in payment this could deplete your cashflow and make it impossible for you to operate.
Credit insurance allows you to extend extra credit with confidence and also gain an edge on your competitors who may not be comfortable offering credit terms that these larger clients require.
Expand Into New Markets
Whether expanding your business operations interstate or especially overseas, taking on new clients outside your normal business territories comes with great risk. Your credit insurance policy will not only help to ensure your cashflow is protected but also help you investigate the credit worthiness of these customers (more on that in a minute).
Better Access To Finance
Credit insurance offers great security to banks and financiers. This makes offering you finance much less risky and will allow you access to faster and higher levels of finance to expand your business.
Improve Debt Management And Client Credit Checks
As part of your credit insurance policy the underwriting company will also help you to manage and minimise your credit risk. After all they want to know who you are offering credit to and how good your credit management practises are because they will be paying the bills if your client doesn’t.
Our credit insurance partners Trade Credit Risk Pty Ltd provide valuable and ongoing information regarding the credit worthiness of your clients so you always have a clear picture on the financial health of your new and current clients.
They can also research and inform you of any specific trading risks that you need to be aware of when doing business in foreign countries.
For a growing business this type of risk protection and financial certainty will allow you to focus on managing your business and exploring new opportunities with more confidence. After all getting paid for the delivery of your products or services is crucial to your continuing success.
If you’d like to learn more about credit insurance or the different levels and types of policies available please contact us today.