A business, no matter its proportion, is vulnerable to several risks. As a result, numerous risk management strategies have to be put in place to keep a business afloat. One of the most significant risks a company is exposed to is its accounts payable. A certain amount of trust that the client will pay their dues on time has to be served as a down payment. However, what happens in case the client does not pay?
Every business, be it an SME or a global corporate, needs to be prepared for such a scenario. An excellent way to go about it is through Trade Credit Insurance.What is Trade Credit Insurance?
There are multiple causes like an unforeseen delay or insolvency on the client's end that can lead to an inability to pay your business its dues on time. Trade Credit Insurance protects you against your clients, defaulting on their payments. It is a safety net that can help you stabilise your business in case of a discrepancy in your incoming revenue.How does Trade Credit Insurance protect a business?
According to experts, 40% of a company's holdings are their accounts receivables. In extreme cases of a dent in these assets, a company can encounter a possibility of bankruptcy. Trade Credit Insurance can serve as a saviour for such risks. When a client fails to make a payment on time, your Trade Credit Insurance can bail your business out by stepping in to pay a portion of the defaulted amount. As per the International Credit Insurance & Surety Association, if a buyer or client fails to pay, then the trade credit insurance will payout a range between 75% to 90% of the outstanding debt.
As mentioned earlier, Trade Credit Insurance can serve as an emergency reserve that can help a business maintain the status quo on its balance sheets and mitigate risk. Moreover, this insurance can even help you expand your business by stabilising your cash inflow.
Furthermore, trade credit insurance policies are flexible and enable businesses to cover their entire business portfolio or just have their key accounts under their trade credit policy. They protect against debt and unforeseen market downfalls.How does a business select Trade Credit Insurance?
One of the most recommended ways to select a Trade Credit Insurance for your business is to bring insurance experts like those at Zoom on board. Specialists in the market will conduct an exposure analysis of your business. They will identify the trade risks and transactions that need to be insured and get you the best possible quotes from top trade credit insurance providers. They will even negotiate on behalf of your organisation with an insurance provider.
Additionally, by bringing Zoom on the picture, you will also get quick claim settlements, administrative support and the security of your trade credit insurance policy being made to work optimally for your business.
If you want to know more about how Trade Credit Insurance can help keep your business manage risks or want insurance experts who can help your business with a trade credit insurance plan, contact us today!