Trade Credit Insurance – A Cushion to Save Company from Financial Losses

When you run a business, the major risk that is involved is financial trouble. There can be instances when customers might not pay you on time. Survey say that bankruptcy cases are increasing every year since 2006. Bankruptcy doesn’t only impact a business, but increases unemployment rate, uneven market trade and big companies that handle foreign markets also impact currency policies.

It is imperative to protect business from bad arrears if your business relies on customers for revenue. Trade credit insurance which is also called accounts receivable insurance is an easy way of protecting your trade from bad debt, especially when customers fail to make payments for your merchandises or services that has already been supplied. It is protection or cushion against defaulters and bad debt. Generally, it is helpful in situations when customer or other party is in financial loss or filing for bankruptcy.

Niche Trade Credit on Sydney, Australia is considered a specialist in credit insurance brokerage. They’ve been in this profession for more than thirty years therefore their credibility and knowledge cannot be doubted. It helps by protecting and avoiding insolvency of your company due to unpaid invoice of any client. This means, if the client misses payment, your insurer will cover it up. Niche TC is known for their professionalism and friendly staff all over Australia.

Here are some advantages of credit insurance –

  • You will get more customers since your credit terms and insurance is helpful to them as well.
  • You’ll gain confidence within to build and inflate your market since you already have backup plan ready.
  • It gives you the guarantee of non-stop cash flow which also helps in building strong relationship with suppliers and buyers.
  • The insurance also helps you to talk with clients in your terms which safeguard your relationship with clients.
  • When cash flow is unstoppable, then your relationship with banks and financial institutions is also improved.
  • The chance of risk management is less which keeps shareholders and board of directors’ calm.

The process of using credit insurance is very simple –

  • The credit insurance company will first analyse your buyer’s credibility and probability of paying back invoices on time. This will help in calculating the amount of insurance you need.

(This rating is helpful for you as well because it helps to understand good and risky clients.)

  • You can continue it your business in normal way and credit insurance company will provide you regular analysis report of trade market.
  • By nay chance, your client is unable to pay you, you simply need to inform your insurer and they will take care of the payment.

Role of insurer –

  • They will first contact the client to find the current financial status. If the client need some time for payment or renegotiate the payment terms, the insurer will help them.
  • If your customer has filed for bankruptcy, then your insurer will work as a debt collection agency and contact liquidator to derive money or settle a certain amount.
  • If there isn’t any chance of deriving money from customer, then insurer will pay 90 percent of your debt according to your policy terms.

Recession has shown bad days to almost every company. Big or small, business can undergo any kind of financial struggle. It is an eye-opening for every business to stay insured.