Accounts receivable represent between 30% and 40% of a company’s assets. This vital component is the key to a healthy business. With trade credit insurance, you protect this asset and get several benefits :
Risk protection against non-payment
On average, one in every ten invoices becomes unpaid. This consequence is devastating to the company.
Foreign invoices are more likely to go unpaid due to complexity of payment procedures.
This can be detrimental for the financial performance of a business, affecting profitability and margins.
With trade credit insurance, the risk of non-payment is transfered from your balance sheet to the insurer.
Credit insurance to increase your finance
On average, banks lend up to 80% more if the company get a credit insurance with a company. Banks will give better financing terms when the risk is reduced. In the end, the cost of funds is lower.
Increase your sales
When receivables are insured, a company can propesct with new customers safely or increase the sells to existing customers without increasing the risks. it help to develop your sales strategy into new international markets.
Offer Open account trade
With a trade credit insurance policy, you don’t need to use letter of credit to secure your sells, you can offer open account terms without the risk of non-payment of commercial debt.
Credit insurance helps you to negotiate stronger by offering longer credit terms to your agents or your distributors. For exporters, this characteristic can be a major competitive advantage.
By insuring trade receivables, your company reduce exposure to bad debt effectively turning risk capital into growth capital.
Credit insurance as Information tool
By gathering information about buyers from a variety of sources, the credit insurer give you proactive information on your customers to avoid foreseeable losses and help you to identify potential dangers before they begin to emerge.
With this data, your company is now able to oversee its credit exposures far better than would be possible in the absence of such information.