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Utilising trade credit insurance can offer a business a number of benefits:
Promotes growth whilst maintaining controls
The enhanced credit management processes reinforced by credit insurance allow you to safely extend payment terms to customers in existing and new or developing markets.
Directs and supports sales to higher margin markets
Top or key account cover is available to support sales to specific or high level margin markets
Supports mergers and acquisitions
Credit insurance provides investee companies with protection against bad debt from acquired or merged customer portfolios
Having credit insurance can increase your credit rating giving access to improved and more economical levels of finance
Balance sheet engineering
You can use the debtor asset on your balance sheet to free up working capital by utilising invoice discounting or factoring.
Cost effective security provision
Credit insurance can act as a cost-effective replacement for expensive bank guarantees and letters of credit.
Enables companies to extend credit terms
As your shipments are covered, the fear of “not getting paid” is removed meaning you can offer extended payment terms to customers giving you a competitive edge in your market.
Reinforces credit management processes
Disciplines within a credit insurance policy support best practice and sound credit management processes, reinforcing and enhancing your existing procedures.
Access to credit risk expertise and analysis
Support is available for setting credit limits on your customers, collections, and, in the event of a claim, the management of recoveries and salvage.
Identifies potential losses
Access to key credit risk analysis from the insurers on company, sector, and political risk gives insight to assist in avoiding losses.
Greater insight into customers’ likelihood to fail
Valuable market intelligence from the insurer including trend analysis, payment performance, and economic and political challenges affecting your customers.
Transfers risk to insurer’s balance sheet
Credit insurance removes the credit risk from your balance sheet which improves your margin and bolsters your P&L.
Reduces bad debt provision
As potential losses are covered, you can reallocate excess bad debt provision as working capital.
Last updated 3 February 2017
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