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Trade Credit Insurance: Is it time to insure your Debtors' ledger?

Trade Credit Insurance: Is it time to insure your Debtors' ledger?

A big part of success in business relies on finding new processes for growth and often, we engage new suppliers. Unfortunately without an existing relationship we can't trust that we'll receive timely payments, yet in business-to-business provision, credit terms are the acceptable form of remittance. With each credit granted, we can increase the strain on cash flow and expose ourselves to the risks of non-payment. So how do we ensure our businesses are protected from bad payers and a potentially long list of debtors? A Trade Credit Insurance policy.

What is Trade Credit Insurance?

Trade Credit Insurance, also known as export credit insurance or business credit insurance, is designed with your cash flow in mind. Trade Credit Insurance can protect you against bad debts or the insolvency of your business suppliers. The money owed by debtors is one of the largest assets for most businesses and yet it is often uninsured. This insurance is of largest use in the construction, mining, transport and civil industries, but exposure can be applicable in any industry, particularly those who rely on one or two main entities for the majority of their work.

What risks are covered by a Trade Credit Policy?

Commercial Risk Cover

Customer insolvency
Protracted default (failure of your supplier to pay within a specific time period following their due date)

Export and Political Risk Cover

Contract frustration (due to war, civil war, riots or commotions)
Inconvertibility of currency (inability to pay in the invoiced currency)
Cancellation of import or export licences
Contract cancellation (resulting from action by the Government of the buyer's country)
Contract repudiation (customer's failure to accept goods despatched)

Added Benefits from Trade Credit Facilities

Selected Trade Credit providers can also offer thorough solutions for your business:

Credit risk management (insolvency advice, debtor investigations and preparing new or auditing current credit management procedures)
Reporting (from simple credit checks through to thorough investigative reports)
Access to the Personal Property Securities Register (PPSR) portal for debtor monitoring and alerts to sudden changes in debtor circumstances

Ask yourself:

What would the impact on your business be if your largest client couldn't pay? Could your cash flow remain intact to make up for the short fall?
How do you assess the credit worthiness of a new or potential client? Do you have a vetting procedure before credit terms are offered?
How do you monitor the credit risk factors of your debtors?
Do you have a tested and practised, successful method of debt recovery?

Cyber Liability Insurance

Cyber Liability Insurance is designed to help protect you from claims and support your profitability in the event of a cyber breach or attack.

Details Get Quote

Public Liability Insurance

Public Liability insurance is there to provide protection if someone makes a claim against the insured, the business or its employees.

Details Get Quote

Business Insurance

A business insurance pack can provide cover for your business premises and contents, against loss, damage, theft or financial loss from an insured interruption to the business.

Details Get Quote

What would the impact on your business be if your largest client couldn't pay? Could your cash flow remain intact to make up for the short fall?
How do you assess the credit worthiness of a new or potential client? Do you have a vetting procedure before credit terms are offered?
How do you monitor the credit risk factors of your debtors?
Do you have a tested and practised, successful method of debt recovery?

By taking out a Trade Credit policy, you are ensuring safer business growth, enhanced in-house credit management, greater borrowing and financing options and secure, timely debt recovery. Contact your broker on 08 9025 3212, who can connect you with the right provider to protect your financial resources and grow your business!

General Advice Warning: This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is appropriate for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement.

All information above has been provided by the author.

Centrewest Insurance Brokers, ABN 44009265105, AFSL 245406