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Benefits of Trade Credit Insurance

Trade Credit Insurance Benefits

Bad debt is a growing issue within the UK and business failures are at an all-time high. With the likes of COVID, Brexit and the current war, more people than ever are getting into debt for a range of reasons. This is, unfortunately, going to continue through the recession so there is a huge need for insurance for these businesses in the form of trade credit insurance. Trade credit insurance protects your business from bad debtors and ensures that businesses can recover up to 90% of their losses from money owed by bad debtors which gives you a piece of mind when performing your everyday business tasks.

Credit insurance is suitable for any kind of business from trading nationally to internationally in a range of sectors. This benefits both Micro businesses all the way up to multinational corporations. Apart from helping you to recover losses, there are other benefits that are included with trade credit insurance. In this article, we will go through these benefits.  

Insights and Intelligence

Having credit insurance brokers with you when looking for a policy is the best way to perform business as they can provide you with much more information than what you would be able to find yourself. You will be able to find out about the financial health of a business that you are thinking of doing business with, this can save you a lot of time and money as if they have bad financial health, then the chances are, you won’t get your money back. Insurance brokers are able to share this information with the key policyholder. Your customers have a lot of interest in ensuring their suppliers can obtain their credit insurance and provide up-to-date information. 

Legal Advice 

As we said, bad debtors are a growing problem in 2022, so trade credit insurance can help with legal advice and take action for you. If a customer is refusing to pay their bill, then the legal recovery team of the insurer will take action to recover any outstanding debt. This in turn saves you money on having to get debt collectors out to recover losses. If the customer is still trading whilst they are not paying you, then they will be declined when trying to claim on a policy. This does not have to be in the UK as most insurers have a good understanding of international business. 

Access To Finance

When a business has trade crest insurance, bankers and other lending organisations will see that you are protected. When you go for a loan, bankers will look at you more favourably and will provide you with extra funding to support your plans of growth. If you are a business that uses invoice financing, then trade credit insurance can provide your finance company with the security for additional funding.

Reduces Risk

When dealing with large amounts of money, it is not uncommon for these businesses to become insolvent through no fault of their own. Having trade credit insurance in your back pocket can act as your lifeline as it helps to mitigate these risks by putting you in the power seat and allowing you to provide cash flow relief if a customer refuses to pay or becomes insolvent.

Heading Off Problems

Every business faces bumps in the road and it can affect them all differently. Some may be factors that could have easily been avoided. Unfortunately, there are other circumstances that are completely unavoidable or even impossible to foresee such as COVID. Having trade credit insurance will help you to head off these problems before they arise.  

Export With Confidence

When dealing with clients who require cover for a large amount, it can be daunting as you always wonder whether they can pay. But on the other side of things, businesses who use trade credit insurance wonder whether they are in their parameters of the policy as well as a range of factors that change from country to country. The great thing about trade credit insurers is the fact that they often have offices in multiple countries which means that they have the expertise and knowledge to give you the best advice meaning you can perform business with confidence. 

Boosts Sales

Not only can trade credit insurance helps to protect you and your business, but it can also help to boost sales and conversions. By having trade credit insurance, you can offer your customers much more attractive financing options for payment terms and limits. This is always competitive, and if you can offer better terms than your competitors, then your clients will choose you over someone who can’t provide what they need.