Trade Credit Insurance is the protection of receivables against
loss due to the insolvency or default by trade debtors both in
Australia and overseas.
Trade Credit Insurance provides protection against:
Why Credit Insure?
· Are you anxious about your customers’ financial stability?
· Would you benefit from access to additional working capital or cash?
· Are you looking to expand into new, possibly politically volatile, markets?
· Could a bad debt significantly impact your financial performance?
What would happen if one of your largest clients failed?
Statistics show that, on average, debtors represent over 40% of a company’s current assets. Therefore the need to protect the balance sheet and shareholders’ funds against the failure of debtors is of paramount importance.
The risks to your cash flow, working capital and profits, in the event of the failure of a major client, can be significant but a simple tailored credit insurance solution is available.
BENEFITS OF CREDIT INSURANCE
Security for Finance
Your credit insurance policy can be assigned to a bank or financial institution providing an opportunity for additional secured finance.
You can grow your business with confidence knowing that your debts
Peace of mind
Credit insurance provides a virtually unlimited cash reserve for a known cost.
Protecting Profits and Cash Flow
The extra sales which are required to offset a loss of $50,000 can be as
much as $1,000,000 where pre-tax profit margins are 5%.
Credit Insurance will inject liquid funds back into your business.
Enhanced Credit Management
Even the most stringent and disciplined credit manager cannot guarantee
the prevention of bad debts. Credit Insurance will, however, enhance and
strengthen credit management procedures.
Trade Credit Insurance indemnifies businesses for the gross outstanding invoice/s value of goods or services provided to their customer in the event of insolvency or default.
Exporters can also be protected against political risk occurrences
The granting of credit terms is an unavoidable and essential ingredient in commercial business as it directly affects the working capital requirements for all companies. For many companies today,
business trading has become very volatile. Even companies that were once considered “blue chip” have become renowned for their high profile business failures. This in turn has a domino effect on
their suppliers and has a profound impact in the market place.
WHY BUY CREDIT INSURANCE
Virtually any company that sells goods or provides services on credit terms to their customer is exposed to the risk of non-payment.
Even companies with the most sound credit control processes cannot avoid the risk of a customer defaulting on payment. The answer is to mitigate your credit risk exposure and use the risk transfer
market through Trade Credit Insurance protection.
MAJOR BENEFITS OF TRADE CREDIT INSURANCE
• Transfer the risk of non-payment to an S & P “A-” rated credit insurance provider
• Enhance the ability to offer competitive credit terms to new customers
• Grow business with existing customers
• Preserves profits and protects liquidity and cash flow
• Provides security to Bankers and protects shareholders assets
HOW IT WORKS
The policies cover you up to 90% of the amount owing and premiums are cost effective and are a planned tax deductible cost.
Companies can insure their whole debtor ledger, select nominated debtors or insure a specific debtor and can be project specific.
Cover can be available for pure domestic (Customers in Australia and New Zealand), or pure export ( Overseas customers) or a combination of both.
PROTECTING YOUR DEBTORS LEDGER