Posted: 30/03/21 by Konsileo (Trading) Ltd
Trade Credit insurance helps protect your business against unforeseen occurrences that may threaten your business against losses from non-payment of a commercial trade debt.
It is available to businesses of all sizes, from SME’s to large corporates across any sector that supplies goods or services on credit terms.
Policies are flexible and allow the policyholder to cover the entire portfolio or just the key accounts.
Insurers proximity to the market, their relationship with customers and their access to proprietary information and market intelligence, help them to detect potential insolvencies before they are filed.
Even secure business environments can be influenced by the growing uncertainty of external factors. This can cause unexpected bad debts from previously very stable businesses. A credit insurance policy gives the policyholder access to an extensive information network which acts as
an effective early warning mechanism for adverse customer trends.
Bad debts affect short-term cash flow and long-term profitability. Applying long-term strategies to protect short-term risks, helps ensure that cash flow remains positive even in the face of catastrophic loss events.
The Cost of a Policy is based on:
• Insurable turnover
• Trading sector
• Past loss history
• Credit Control details
• Protection against non-payment - Should a customer be unable to pay its debts due to insolvency or protracted default; trade credit insurance will pay out a percentage of the outstanding amount owed (typically around 90%).
• Reduce bad debt reserves – trade credit helps free up capital for the business to use elsewhere.
• Cash Flow Relief – Provides cash flow relief when a business’ customers become insolvent or do not pay their bills on time. Losses can be indemnified, allowing the business to maintain its cash flow.
• In-depth knowledge – insurers provide businesses with extensive knowledge on their customers, sector and economic trends.
• Portfolio Monitoring - Provides access to professional portfolio monitors who track customers’ ability to meet their financial obligations to the insured business.
• Access to New Markets - Helps protect businesses against the risks of exporting overseas, reducing uncertainty for firms.
• Accounts Receivable Support – Offers businesses access to professional Trade Credit analysts who can share best practices with a company’s credit department.
• Collection Services – Can provide access to cost-effective collection services.
• Facilitate Bank Financing – Banks will typically offer more favorable lending terms to businesses that insure their accounts receivable.
At Konsileo, we have a Trade Credit Expert who has more than 25 years’ experience within Trade Credit Insurance in which she plays an essential part of the continued growth of businesses.