Looking ahead, there will be a time that business trading resumes at a more normal rate. Cashflow issues can be reduced at this point by making sure you have control over the money owed to your business, in turn allowing for growth and prosperity as lockdown rules are eased.
Protection of your assets has always been important in business; cash assets which are owed to the business are frequently overlooked. This is where trade credit insurance could help.
Many companies are unaware of the existence of trade credit insurance. It is a service which enables you to do business in the knowledge that, if your customers do not pay, you have a back-up plan in place, providing ongoing financial protection as well as a range of other benefits. In other words, you will be paid even if your customers cannot pay you.
This can be broken down as follows:
- Cover is provided for insolvency or if a buyer refuses to pay
- This is backed up with legal assistance (insurers are a force to be reckoned with!)
- There are different types of cover (for example ‘all customers’ or ‘specified customers (5 or more)’
- It fits around your existing accounting procedures
- Annual policies ensure year-round protection for your business
Whatever the reason may be for a customer not paying you, whether it is due to insolvency, lack of cash, or delays in them being paid themselves, trade credit insurance, at its simplest, covers 90% of any outstanding credit balance in the event that a customer fails to pay you.
Trade credit insurance is a bespoke and personalised service tailored to each company we work with. It is suitable for businesses with a turnover of more than £1 million who offer credit to their customers.
How else can trade credit insurance help?
Trade credit insurance is about much more than financial protection. It can provide access to highly valuable reports about the ‘health’ of the companies you are planning to do business with, sector insight and activity in the marketplace – all of which can enable businesses to implement growth plans with confidence and be in control of the company’s future direction.
Trade credit can free up capital which can be used for growth, making it a genuine asset for your business and enabling you to determine the direction in which your company is going.
I cannot afford to spend more on my insurance right now…
We appreciate that costs for everyone are under the microscope at the moment, but can you confidently answer the following questions:
- Who is your largest customer or outstanding balance? How hard would it be to replace it if they found themselves in financial difficulty?
- How do you protect against customer insolvency – cash, reserves, credit checks…or do you have nothing in place?
- Who decides how much credit new and existing customers should have? Could having this backed by an insurer help?
- Do you often have a clash between credit control and sales/operations?
- Who do you use for legal action to recover debts? Is the cost known upfront?
Let’s try and build some certainty for your business in a world which is currently far from it.
For more information on trade credit insurance, please contact Jim Stevenson at jim.stevenson@astonlark.com.
https://www.astonlark.com/