5 ways your competitors use credit insurance to grow

Business growth requires far more than a successful sales team, good margins, and a durable business model.

All of these elements are essential, of course, however there is also an often-overlooked business tool that can dramatically improve your organisation’s chances of success.

Trade credit insurance is often viewed as a risk mitigation tool, and it definitely fulfils that role. However, there are ways to use trade credit insurance to actively grow your business, not just protect it.

Atradius client, Ausfine Foods is an Australian exporter that is very active in trading dairy and meat products around the world, including buying and selling from Australia, New Zealand, USA, Europe and Asia, including the Philippines, China, Indonesia, Korea, and Malaysia.

Garry Embleton, operations director, Ausfine Foods, has a 30-year history in the industry and has always used trade credit insurance. According to Garry, there are five ways Ausfine Foods uses trade credit insurance to grow the business:

1. Supporting trade funding lines

International trade businesses rely heavily on bank trade finance. As a high-turnover, low-margin business, Ausfine Foods relies on having adequate bank funding in place to support large deals.

Garry Embleton said, “Without having trade credit insurance, bankers wouldn’t have comfort to provide the funding we need. Having trade credit insurance means we can achieve higher levels of funding from the bank to support the deals we want to do, and we have virtually doubled our finance by having insurance in place. This also lets us respond quickly to opportunities as they arise.”

2. Insuring the debtor book

As a global business, Ausfine foods has, at times, a very large debtor book. With trade credit insurance covering 100 per cent of the business’s turnover, the owners and directors of the business have comfort that a debtor default does not spell disaster for the business.

Garry Embleton said, “We have a comprehensive insurance policy that means, if a buyer falls over for any reason, the policy is robust enough to cover almost any eventuality. This protects cash flow and means the business can expand with confidence.”

3. Gaining valuable business insights for decision-making

Deciding which organisations to do business with can be difficult. It’s important to ensure customers have a good credit rating, are low-risk, and will contribute to business growth. Ausfine Foods relies on Atradius to provide insights on reasonable credit limits for each organisation it does business with.

Garry Embleton said, “Atradius is the best among the competition when it comes to fast turnaround on insights and good dialogue on any problems with providing limits to organisations. In many ways, Ausfine Foods is looking to grow by doing less business but doing better business. Insights from Atradius have helped us look more closely at what areas of business we shouldn’t be involved with. This has let the business grow to a point where we can say no to some potential customers.

“Atradius insights give us comfort to grow in the areas that we want to be in, as well as insights into when it’s appropriate to say no.”

Ausfine Foods uses Atradius as its primary creditworthiness check on potential new customers, and the business takes Atradius reports very seriously, deciding whether to work with customers or not based on those reports.

Garry Embleton said, “If Atradius supports working with the customer then we look on the customer favourably. If Atradius has concerns and recommends a lower credit limit than we’d be looking for, we take that seriously and consider we may want to do a little less business with that customer or maybe stagger shipments and deliveries to stay within Atradius limits. If Atradius refuses a customer, which often is based on confidential information that Atradius can’t share with us, we understand that the customer may not be creditworthy at all. Rarely would we continue to do business with someone that Atradius isn’t prepared to write a limit on.”

4. Building stronger relationships through insurability

Growing a business requires strong relationships with suppliers. With the knowledge that these suppliers also have their own trade credit insurance requirements, Ausfine Foods leverages its insured status with Atradius to become a more attractive customer for potential suppliers.

Garry Embleton said, “A key part of business is not just the credit insurance we take out but also knowing that suppliers take out credit insurance on us. Having our debtor book insured makes us attractive to suppliers’ insurers, maximising the limits a credit insurer will offer. This can improve our capacity to trade with suppliers.”

5. Improving global competitiveness

Given the global nature of Ausfine Foods’ business, global reach is important in an insurer. It’s essential that the market insights Ausfine Foods receives in Australia are just as accurate and relevant when dealing with overseas organisations.

Garry Embleton said, “Global reach is really important for Ausfine Foods because we need an insurer that can get buyer credit information across the globe. These reliable market insights are vitally important and Atradius has that market reach. At the same time, Atradius can look at our business on an individual basis and tailor the policy to our needs and set premium rates at an acceptable level for us.

“Ausfine Foods has had experience with other trade credit insurance providers. We are very satisfied with Atradius; it’s a good, reputable business to deal with and the team treats us very well. Ausfine Foods has good access to people to help solve specific problems and also to get a wider sense of market insights to help drive decision-making and leverage growth opportunities.”

Want to find out if trade credit insurance is right for you?

Book a FREE phone consultation with Joe Lewis who is the Joint Head of our New Business team. He'll learn about your business, your current credit management process and help you figure out if trade credit insurance is a good fit for your business. It's an obligation free discussion.