Credit insurance is deemed a “must-have” investment for many businesses these days. With current business insolvencies at an all time high, it makes sense that business owners want to ensure that there is financial stability and protection in place.
But, as well as fundamental protections, there are also ways in which credit insurance can be used to support business growth in some cases, particularly for small and medium sized businesses. With that in mind, let’s take a look at some of the benefits that credit insurance can provide.
Faster Business Growth
Credit insurance allows for the increase of order volumes and this, in turn, results in a bigger customer base. If a credit insurance policy covers the invoices generated, then orders won’t require tight credit restrictions, which can allow for quicker growth. Investing in credit insurance can allow your business to confidently grow and expand, whilst also allowing you to deal with the increase in new clients. This is particularly recommended for smaller businesses, where just one client or customer becoming insolvent at a time when invoices are outstanding, this bad debt can then pose a risk for your business.
Extra Peace Of Mind
The current business landscape is providing many challenges for businesses, especially some that had anticipated faster growth but have, instead, been hit with higher tax payments, increased labour costs and more expensive raw materials. It’s not looking likely that such a demanding landscape will ease up anytime soon, which is why more and more businesses are looking for ways in which they can ensure protection for their business.
As well as this, there are still ongoing shortages of some stocks as a result of the COVID-19 pandemic causing lockdowns in distribution and production centres. Further supply chain issues are also adding to issues with business development and growth. As such, in this hard environment, protecting your cash flow is critical. This is why credit insurance provides some extra peace of mind during any difficult times – knowing that your credit is protected can help you to run your business more confidently.
Reduced Costs
Trade and export credit insurance can help to significantly reduce business costs, as in some businesses, finance staff will spend a lot of time assessing and checking new customers and clients for credit, whilst also conducting ongoing monitoring of existing ones. You may find that you need to pay for credit databases in order to access this information, but credit insurance can help to reduce these costs, often quite significantly.
Trade credit insurers may also typically handle overdue account collections, or if the insurer has an overseas business network, then savings made in this area can feel more significant. For export credit insurers, having an insurance policy in place can reduce the cost and time of processing new leads, further protecting business spending.
