Covering the cost of your credit

As a small business grows and starts to fulfil larger orders, the issue of their client’s credit worthiness increases in importance. One large client becoming unable to pay their invoices can leave a business in serious financial peril. 

How Secure Are Your Customers?

The Insolvency Service reported that in Quarter 3 last year 3,539 Companies became insolvent in England & Wales.  In the prior 4 Quarters over 15,000 Company Insolvencies occurred.
There are many reasons that a company fails; sometimes these are specific to the business, but there can be wider industry or economic reasons as well.  Devoting the necessary resources to analysing which of your customers pose a significant risk can be problematic.

Assessing the Risk

Just some of the factors which must be considered:

  • Economic conditions – such as interest rates
  • Industry – some sectors are more prone to bad debt than others
  • Seasonal factors
  • Groups – a company might be part of a heavily indebted group of companies

These are in addition to the individual factors affecting how a company is performing now and in the short and medium term.

Why Insure?

Credit insurance claims payments replace cash (typically 90%) lost through bad debt  

Increased confidence allows you to expand sales and grant credit to customers when backed by insurance

The extra security provided by a credit insurance policy can improve access to finance

Replaces the need for a large (and difficult to assess) bad debt “reserve”

Cover extensions for particular industries, for example Construction and Recruitment

The Options

There are a number of options for credit insurance cover and you may be surprised how competitive premiums are.  Talk to us today to see how we can help.