The manufacturer who is a supplier of trade credit may face non-payment risk from customers and a capital shortage problem simultaneously, providing tailored coverage for financial institutions, commodity traders, exporters and investors, you view insurance as an enabler for growth as well as providing essential protection for when challenges present themselves. As an example. And also, the costs need to be weighed against the opportunity that credit insurance gives you to explore new markets as well as the impact a bad debt can have on your organization.
Export credit insurance helps organizations remain competitive by offering open terms when letters of credit or prepayment may have previously been the only safe way to do business, customers will appreciate being able to pay on credit as opposed to having to pay cash, which can help increase customer goodwill and loyalty. In addition to this, your talented and experienced associates manage risk and ultimately support the profitable growth of organizations in a dynamic, competitive and ever-changing marketplace.
You have extensive technical expertise on credit risk evaluation. Along with the design, placement and servicing of credit insurance policies, quoted market prices in active markets are the best evidence of fair value and shall be used as the basis for the measurement, if available, then, credit insurance helps businesses trade with confidence, plan for strategic and sustained growth, and explore new markets or products, knowing that the business is protected against credit risk.
For small business owners, the greatest benefit of trade credit is the opportunity to greatly reduce or even eliminate the dip in cash flow between when you purchase inventory or supplies from a wholesaler and when you can make up that expense with sales revenue, insurance can lead to increased confidence and new opportunities, especially in businesses that trade internationally. Not to mention, unless you demand payment upfront, your customer could fail to pay you for the goods or services you provide.
Trade credit insurance (also known as credit insurance, business credit insurance or export credit insurance) is an insurance policy and risk management product that covers the payment risk resulting from the delivery of goods or services, having adequate trade credit insurance can give you the confidence and peace of mind you need to embark on a growth program through exports. Besides this, as a credit management tool, trade credit insurance allows you to protect your accounts receivable and reduce credit risk for a low price.
Overall, trade credit insurance can be a great tool for minimizing credit risk and protecting your accounts receivable (and business) from any significant losses, premiums are calculated based on a percentage of the turnover combined with the level of risk, so the cost can be much lower than many business decision-makers expect. By the way, powered by distributed ledger technology, your secure and connected API-driven platform facilitates the movement of assets and credit around the world.
Solid trade credit insurance is as much a growth strategy as a defensive measure, before granting covers for the insurance various terms and conditions need to be fulfilled. To say nothing of, it is purchased by organizations to protect themselves in the event a key customer or group of customers fails to pay debts owed to your organization.
There are plenty of ways that offering trade credit to businesses benefits established suppliers, if a customer is suddenly unable or unwilling to pay for a delivery, the insurance covers the loss and the seller receives payment, ordinarily, corporate insurance is designed for large, complex organizations where the risk exposure is broad and multi-faceted.
Want to check how your Trade credit insurance Processes are performing? You don’t know what you don’t know. Find out with our Trade credit insurance Self Assessment Toolkit: