The Importance of Trade Credit Insurance in the Construction Industry

During the Bloomer Constructions failure, the trade credit insurance policy I had allowed me to sleep at night. I knew that if all else failed, I had insurance cover for the majority of the Bloomer debt. The only component that wasn't covered was the retentions but I now have cover in place for that since I swapped my policy over to SubbiesUnited's preferred broker Acquire Trade Credit Insurance. Debtor insurance is not that expensive now and you can pay it off over 10 months so you don't really miss it like you would if it was an up front lump sum. Most people insure their house, vehicles, business premises and we have business interruption insurance yet the vast majority of subbies don't insure what pays for all that supports our way of life, our business revenue, our debtors and that just doesn't make sense. I write this today because this week I have been overwhelmed by reports on the number of builders who have shut their doors and didn't reopen or have put their company into liquidation. There is a liquidation storm coming our way. The latest dirty liquidation is Future Urban Residential where they took pre insolvency advice for months, used subbies and their clients to rake in as many claims as possible, even up to the last week before they liquidated. The liquidator was referred by the pre insolvency advisor. They knew many months ago they were in trouble but a few days before liquidation, they were still using the services of subcontractors to rake those last few claims in from unsuspecting home owner clients. Trade credit insurance analysis for your debtors is free so get a quote for you business, it may save it from failure in the near future. Following is some information supplied by Acquire Trade Credit insurance.

Insolvency rates in the Australian construction sector have reached alarming heights, with a staggering 17% of all insolvencies occurring in the building industry. This alone highlights the importance for sub-contractors to protect their revenue with Trade Credit Insurance. Most businesses hold Public Liability and Property Insurance but the figures show that businesses dealing on credit terms are far more likely to suffer a Trade Credit loss, and in many cases a company's debtor's ledger is their most valuable asset. A substantial loss from non-payment could result in a business going under themselves. Trade Credit Insurance provides the peace of mind that you are protecting against that exposure.

Insurers assess risk based on many components of a business and its operations. They include:

When sourcing a policy, Acquire Trade Credit will assess a business's risk profile to determine which extensions are suitable to that particular policy holder. Some common extensions include:

Acquire Trade Credit is the preferred Trade Credit broker of Subbies United. We review a client's business and credit risk before approaching the market. We will approach the entire market to find the most competitive premiums, and the most suitable cover for a business's needs. We will then present all the insurers terms and explain the benefits and wording of each policy. Once you have placed a policy with Acquire Trade Credit, we will manage all your credit limit requests, provide up to date information on all buyers, and manage any claims and non-payments that you may have.

The lifeblood of a small business is cash flow. The construction industry is a prime example of how major insolvencies can affect an entire community. The flow on effect of a major insolvency often leads to a wave of smaller insolvencies, which again highlights the importance of protecting your aged receivables with Trade Credit Insurance.   

The lifeblood of a small business is cash flow. The construction industry is a prime example of how major insolvencies can affect an entire community. The flow on effect of a major insolvency often leads to a wave of smaller insolvencies, which again highlights the importance of protecting your aged receivables with Trade Credit Insurance.