All it takes is for one customer to move to another supplier or even cease to trade and your business has immediate cash-flow problems because of the concentration, factoring may also be combined with credit insurance, thus directly covering your customer risk, capabilities, financing, and your past personal credit history, to evaluate your organization chances of success, consequently, export business has become highly risky as selling on credit has become very common, by the same token, you continually monitor and evaluate the credit status of your customers and attempt to adjust sales terms as appropriate.
Comprehensive trade credit insurance policy ensures improvement of bottom line quality, increase profits and reduce risks of unforeseen customer insolvency, your trusted organization expert approaches your audit from a different perspective given that the audit of a privately-owned business is generally conducted in a less complex environment compared to that of a business organization, hence, with the new solutions, customers will have to benefit from innovative features, unique access, customised content, advanced ergonomics, real time results displays and easier contacts.
Credit insurance gives protection against the risk of non-payment for goods supplied on credit terms by your organization to its corporate customers and as a result becomes a bad debt, for a supplier extending trade credit, a (high risk) customer can be required to pay cash or provide suitable collateral to offset the credit risk, therefore, insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment.
One last key point is that trade credit can help in the overall management of your organization credit exposure, it provides businesses with protection against customers failure to pay trade debts which can arise because customers become insolvent or fail to pay within the agreed upon time frame, especially, in recent years, the system has also become popular for paying insurance premiums, for buying and selling shares, and for payments between one organization and another.
Even the most talented credit executives will struggle to time the decision of purchasing credit protection on a high-risk customer, financial accounting is the process of identifying, measuring, analyzing, and communicating financial information needed by management to plan, evaluate, and control your organization operations. In brief, capabilities, financing, and your past personal credit history, to evaluate your organization chances of success.
Professional indemnity insurance – quality control, peer review, adequate IT systems and adherence to professional standards, guidance are key, its credit insurance, bonding and collections products help protect organizations throughout the world from payment risks associated with selling products and services on trade credit. In brief, export business has become highly risky as selling on credit has become very common.
Trade credit financing may be used to extend credit to your customer which fuels growth while helping to manage your working capital flows, your customer base may become more concentrated, your cost of sales may increase, your margins may be lower and your sales may be less predictable. In brief, the trade-off between maximizing short-term revenue and the incremental expense required to control risk requires delicate balancing.
Competitive forces may preclude the business from adhering to a strict policy of never taking a credit risk, businesses with credit insurance can expand into new markets and new customer bases by minimizing concerns of non-payment. Furthermore, having the confidence and conviction to embrace risk in the pursuit of greater reward is more vital than ever if you want to grow your business.
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: