Credit insurance is a concept designed to protect businesses against debt losses occurring due to unforeseen circumstances. It is common knowledge among people that customers pay after the due date of the invoice most of the time. Some customers might take their sweet time to pay back, maybe 60 or 90 days. Depending on the number of days and your insurance policy, the insurer should be informed.
While most multi-national companies use Business Credit Insurance to protect their assets, small or medium-sized businesses need to defend themselves with UK credit insurance for their protection. It offers a safety net for any potential credit loss. Having credit insurance can open up sales opportunities you did not have before.
Key Benefits Of Having Credit Insurance
· Not only does it protect your accounts receivable but also offer you so much more:
· Protection against catastrophic losses
· Safe sales
· Increased borrowing availability over pledged receivables
· Decision support and guidance regarding your customers
· Decreasing your bad debt reserves
· Helps to avoid significant impact on your company
Protection Against Internal Risks
If an international customer orders goods from your company, but since their government imposed sanctions on the UK, preventing the customer from paying. If your credit insurance policy covers the political risk clause, a claim could be triggered by this event.
The political risk clause does not only cover problems regarding export. It can also be claimed if a loss occurs due to the lack of information or language barrier with international customers abroad.
Credit Insurance Adding Value
UK credit insurance providers can offer their expert advice regarding credit limits. Evaluating previous credit reports and trading history can be time-consuming for a company. However, an experienced credit insurer can manage trade risk effectively and efficiently on behalf of policyholders.
As a policyholder, you can always ask for an assessment on a said customer. Your insurer would assess the risk and decide whether your credit for the said customer should extend.
Business Growth Risks
With your business growing, there are risks associated with it. New customers, markets, and requests of higher credit limits are all an additional risk to your business. These risks can impact your business cash flow and leave your business high and dry when facing any loss.
When seeking funding, credit insurance is favorably looked upon. Anyone funding a company will be relieved knowing that the company is covered by insurance.
Navigating Through The Market
With any insurance, you want to cover every right policy to protect your receivables. With such a large and competitive marketplace, credit insurance brokers ensure that their clients receive affordable and appropriate deals.
An experienced credit insurance broker can offer a broad view of the market while bringing the best deals to the table. Moreover, they will be by your side when deciding the policies and their renewal.
All In All
Having Credit Insurance can be a significant factor in deciding between survival and going under during any crisis. It protects businesses that rely on customers with credit accounts.