Benefits of a trade credit insurance policy: Learn about our five key benefits of taking out a credit insurance policy.
There are five key benefits of a trade credit insurance policy:
1. Increases your sales and helps you grow
A Credit Insurance policy can help you identify and assess new customers supporting you beyond your normal credit risk appetite. This can also help to grow sales with your existing customers. You can identify new markets to trade in by working with the underwriter upfront. This will allow you to test the water using Atradius information and pre-determine what cover you could get at new business tender stage.
There are also options like offering more competitive payment terms and higher credit exposures, which could be attractive to new and existing customers but also protects you in the event they can’t pay.
2. Improves your cash flow
How many outstanding invoices do you have right now? Cash flow issues from late or non-payments are a key driver for insolvency. A Credit Insurance policy can help your cash flow by reducing the amount of days a sale can be outstanding, will make sure you get paid quickly after a buyer becomes insolvent or fails to pay and allows you to outsource collection services at no additional cost for insured receivables and to get on top of overdue invoices quickly. This is important as statistics indicate that the sooner you get onto a late payment the more chance you have of recovering the debt
3. Unlock better rates from your lender
Did you know a Credit Insurance policy may help you gain access to more finance & increase the amount you’re allowed to borrow? This is because lenders look favourably on businesses that have the added protection of trade credit insurance and can l look to provide you better terms backed by the security of a trade credit policy that allows claim payments to be assigned to them.
4. Reduces bad debt provision and protects your bottom line
Bad debt is a reality in business so reducing this liability and taking off balance sheet is worth it. A trade credit insurance policy allows you to free up some of the cash you’re keeping aside to cover bad debt as the policy will cover you when a customer doesn't pay. And you know what that means? Extra cash flow available for more strategic business initiatives that can grow your business.
Without Trade Credit Insurance a bad debt of Euro 100,000 hits your bottom line.
Operating on a 10% profit margin this will have to be replaced with Euro 1,000,000 of new sales before you can return to the position you were before the loss.
Trade Credit insurance will protect against this and pay you quickly so that any new sales will be realised as growth rather than covering any bottom-line shortfall because of a bad debt.
5. Decreases credit management costs
Credit Insurance helps you make better decisions quicker, improving efficiency and ultimately profitability. This gives you the comfort to focus on what you do best: growing your business instead of chasing bad debt. Atradius has recently launched Atradius Atrium, which provides real time customer data so you can assess your customer portfolio credit quality and identify where you are most exposed in UK or across the globe.