As an insurance broker, you’re probably used to making sure your clients understand the risks their businesses face, then helping them choose the right policies to protect against those risks.
Most business decision-makers understand the need for insurance, including business interruption, professional indemnity, business vehicle, and commercial buildings and content insurance.
There is another form of insurance that significantly helps reduce risk and many businesses either aren’t aware it exists or don’t know how it can help them. Offering this form of insurance can help insurance brokers like you stand out from the crowd and offer your clients a more well-rounded risk-mitigation service.
Trade credit insurance or accounts receivable insurance covers your clients’ businesses against non-payment by customers. The insurer pays up to 90 per cent of the invoice value if a customer goes bankrupt or fails to pay for any other reason, as long as it’s covered by the policy wording.
Having trade credit insurance can help businesses secure finance, attract new customers, and minimise risk when entering new markets. A trade credit insurer can help clients understand which customers to extend credit to (and which ones to avoid), chase down unpaid debts, and protect their bottom line.
And, trade credit insurance is available to businesses of all sizes, from small operators to large enterprises.
For some businesses, usually smaller operations, the benefits of trade credit insurance aren’t immediately clear. After all, if customers generally pay on time and outstanding debts aren’t likely to cause a significant shortfall, they may not see the value. However, there can be huge benefits to trade credit insurance that aren’t immediately apparent. These can include:
- Ability to expand trade
Companies looking to expand can often be discouraged due to the risks involved. After all, if a customer doesn’t pay, it could wipe out the value of the investment the organisation has made. But, with credit insurance, your client knows they’ll get paid, which lets them take advantage of new opportunities, customers, and markets with more confidence.
- Insights for better decision-making
Trade credit insurers collect data on businesses globally, knowing their creditworthiness, reputation, and how financially stable they are. Sharing those insights with your clients lets them make smarter decisions that avoid losses and could even stop them from going out of business.
- Cost savings
Chasing recalcitrant customers for payment is time consuming and stressful. Your clients have better things to do. When they take out trade credit insurance, the insurer can take on that burden for them, chasing down unpaid debts so your client can focus on running their business. This can be invaluable to your client.
- Protection of a key asset
For your clients, their accounts receivable is the number one thing keeping them in business. It is a key asset just like the company warehouse, staff, plant and equipment. So, it’s just as important to protect it. By taking out a trade credit insurance policy, your clients are securing the value of a critical asset that can drive their working capital and profitability.
To learn more about Trade Credit Insurance, contact us, or your specialist trade credit insurance broker.