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Has Covid-19 raised concerns about collecting your Accounts Receivable?

Are your Accounts Receivables being impacted by Covid -19?  Has your company’s cashflow been affected as a result of a downturned market?  Trade Credit Insurance could be the solution you are looking for.

What is Trade Credit Insurance in a nut shell?

Insurance that can protect a company against losses from non-payment or even very late pays to keep your company’s cash flow moving.

What is my company’s risk?

Accounts Receivables generally represent around 40% of a company’s assets.  Companies typically insure all of their physical assets, however 40% of the total assets remain uninsured with roughly one in 10 invoices becoming delinquent.  That’s your risk.

Are there other benefits aside from A/R protection?
While the primary purpose is to provide sellers from a client that cannot pay for a variety of reasons including slow pay and bankruptcy, there are additional benefits. 
  1. Banks and lending institutions look positively toward companies that have their receivables insured and could help in securing financing.
  2. Enhancing your company’s credit support by actively monitoring your client’s financial stability, access to data that can help your team determine to extend credit lines to clients, as well as enhanced collections tactics.
  3. Expanding your company’s sales and competitive advantage by offering open terms to new customers and giving your team the ability to sell with more confidence.

When should trade credit insurance be purchased?

Trade credit coverage is great to have if your firm has issues collecting A/Rs, are able to foresee some sort of industry change/downturn coming or are experiencing credit issues.  However, it’s a great move as well to evaluate trade credit insurance when things are good in the event that an immediate event or unforeseen downturn (COVID 19) happened, that way your company does not have a large asset such as accounts receivable, uninsured.

How does it all work?

If you determine that trade credit insurance would be a good fit in your organization, there are options to determine what you would like to have coverage for.  Firms can evaluate their business and determine if they wish to protect single clients, specific industries, small client, large clients, all the way up to the entire client base.  One size doesn’t fit all and options can be customized to your company’s specific needs.
Topics: Leadership / Strategy