5 reasons to make 2022 the year you invest in Trade Credit Insurance
February 22 2022 By Ingrida Jucyte, BA (HONS) Economics
Trade Credit Insurance has been around for over 100 years, yet many businesses still don’t know it’s available. If you are a company that trades business to business, as well as on Credit terms… then Trade Credit Insurance is for you!
Sadly, this year, global insolvency is forecasted to increase by 33% – it is predicted that the average company will lose more than three of its active customers due to financial issues.
Trade Credit Insurance is the only tool that can protect your business against this. Never before has getting cover been so important, and here are the five reasons why:
1 – Trade Credit Insurance can cover non-payment for a huge range of reasons
When signing a new deal, hurricanes, war and technical meltdowns may not be at the forefront of your mind as a big risk. That said, sometimes these issues can arise, and cause a default on payment.
If you have a Trade Credit Policy, you’ll be covered for these eventualities. This is especially useful if you’re looking to (or already do!) trade in other countries around the world.
2 – Trade Credit Insurance makes expansion into new markets easier, and new business prospects safer
Whether you’ve got your eye on a new market, or a long list of hot leads that you’d like to start trading with – Trade Credit Insurance will give you the peace of mind you need. It will ensure that you’re covered for non-payment so you can continue to build and grow your business, and not have to pull out of new markets or deals.
3 – It can help you increase sales by 20%*
The peace of mind that comes with Trade Credit Insurance in turn enables you to extend trade credit to prospective customers, meaning you can offer better credit terms yourself.
Customer monitoring tools provided by our partners can also give you an early warning that a customer is in financial difficulty, allowing you time to withdraw from the trading relationship safely.
* Reference – A Guide to Trade Credit insurance from Euler Hermes
4 – It takes away the burden of chasing debts, and helps you select which companies to work with
The combination of the customer monitoring tools mentioned above, and a Debt Collection Service means there’s less of a burden on you and your employees to chase and recover debts, should the worst happen.
5 – It could prevent catastrophic loss of revenue
According to research by Euler Hermes, Accounts Receivable usually represents more than 40% of a company’s assets. To cover any potential loss to your revenue, you would have to generate a huge amount of extra income.
It is predicted that the average company will lose more than three of its active customers because of financial distress, insolvency administration or receivership in 2022. So, a business with a turnover of £1.5m earning a 5% net profit margin would have to increase its turnover by 30% in order to recoup a bad debt of as little as £22,500. This is not always realistic!
What are you waiting for? To find out more about Trade Credit Insurance and to take a free health assessment of your business, click here. Or, if you’d prefer to chat to our expert Ingrida Jucyte, you can email her on firstname.lastname@example.org, or call 0161 830 5440.