Trade credit insurance (TCI), which protects your business from unanticipated cash flow issues, unpaid invoices, and bad debts are one of the best ways to protect it. It will help your business grow. How does trade credit insurance work and what are the benefits for you and your company?
Businesses’ biggest asset is often accounts receivable. Potential credit losses could pose a serious threat to your company if your customers cannot pay their debts. Trade credit insurance, also known as credit insurance and export credit insurance, is a type of insurance that transfers risk to businesses that want to protect their receivables against nonpayment
Trade credit insurance policies can be tailored to your needs and offer many important benefits.
- Cash flow relief – A trade credit insurance policy provides cash flow protection to your business from fluctuations in cash flow, primarily due to bad debts or unpaid invoices. Insolvency or bankruptcy can be a result of unpaid invoices, which makes it extremely difficult for companies and their owners to rebound in the future. Businesses have protection with trade credit insurance, which covers unpaid debts. A business can continue to function as though they were paid even if the customer defaults on payments or goes bankrupt.
- Sales Growth – Trade credit insurance helps your business grow and expand without any hassles. This insurance helps you improve credit lines with existing customers and ensures your business continues to run smoothly, despite any non-payment from your debtors.
- Sell on Credit – It is difficult to sell on credit, especially if your business is overseas. Trade credit insurance makes it easy to gain access to foreign markets. Businesses can make better business decisions based on trade insurance and be able to enter foreign markets.
- Get detailed information on existing and new buyers – Credit insurers monitor the debtors of their customers to assess creditworthiness. We can access detailed information about the customer, including financial statements, company history, and other details, via an international database.
- Get early warning signs – Trade credit insurance policies can help you identify potential payment problems before they become serious. To avoid financial losses, you can alert your company by checking for high-risk companies. Trade credit insurance ensures that you can run your business confidently.
- Increased Sales – Trade credit insurance is a great way to increase sales for your business. It allows you to offer more favorable credit terms to customers and prospects, without the need for expensive letters of credit.
- Access to a new market – Trade credit insurances protect against specific export risks by equipping businesses with market information that allows them to make informed choices in foreign markets.
- Insolvency protection – Trade credit insurance protects businesses from insolvency or default by protecting them against sales that are made on credit terms.
- Cash flow relief – Trade credit insurance offers cash flow relief for businesses whose customers are insolvent or fail to pay their bills on time. The business can get indemnified for losses, which allows it to continue its cash flow.
- Reduce concentration risk – For businesses whose bottom lines are dependent on a small number of customers, trade credit insurance can mitigate risks.
- Support – Trade credit insurances provide access to trade credit experts who can share their best practices with credit departments.
Collection services
Trade credit insurance offers access to affordable collection services.
Facilitate bank financing
Businesses that ensure receivables are more likely to receive favorable terms from banks.
Portfolio monitoring
Trade credit insurance provides professional portfolio monitoring that tracks customers’ ability and financial obligations to the insured company.