In business, there is only one thing that is most important and that is getting paid. It is said that the only ‘good’ client is a paying client because let’s face it no one wants to make a loss in his business and the whole point of starting a business is to make profits. There are many reasons for non-payment but whatever the reason; a bad debt can place your business in serious trouble. Credit insurance also known as debtors insurance can be described in simple terms as the insurance of your debtors. This is where an insurance policy is insured, covering your local debtors as well as your international debtors that is if you trade internationally. All the debtors are investigated individually and a cover is issued against payment default by them.
If a business fails to collect money from invoiced debtors on time or even at all, the following effects are likely to happen:
• Problems with cash flow. Where a business may be unable to pay their own debts or even pay their stuff.
• Self-financing. Where may have to pay for the loss from their own turnover.
• Reduced competitiveness. When suffering from bad debt, a business may have no choice but to reduce the amount of credit they give thus making it less competitive.
• Collection of legal cost if a business decides to take action to recover the debt, it results to solicitor fees and the process can be timely.
Credit insurance is a powerful business tool once acquired benefits your business immediately in so many ways. Some of these benefits include:
• There are higher chances of banks offering you more extensive credit facilities on more favorable terms especially if your debtors have credit insurance.
• Credit insurance gives you the absolute confidence to explore higher risk business opportunities you would normally avoid for fear of not being paid.
• It protects the cash flow of your business by replacing cash promptly, should your buyer become bankrupt or payment defaults occur.
When you simply insure your debtors payment risk with a credit insurance policy you will be secure in the knowledge that you will always be paid, even in cases of political risks in international trade. In so doing, you will not be taking any unnecessary risks because bad debt is eliminated and it is only at a nominal fee. In summary, the trade credit insurance policy acts like a safety net protecting you from suffering financial loss because of your customer’s failure to pay their debts.
Credit insurance also known as IMC Newbury debtors insurance is an insurance policy for the insurance of your debtors. IMC Newbury trade credit insurance is a policy to safeguard your business when not been paid by your clients.
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