Trade Credit insurance pays the policyholder if the customers with the billed invoices could not pay for the invoices due to defaulting or financial insolvency.
Trade credits insurance provides assurance that you will get paid for all rendered services and goods, and you do not need to engage in lengthy and costly litigation to claim back the money, the insurer will pay you for all the trade invoices and recover on their own. If the customers go into insolvency or bankruptcy, the loss will be covered by the insurance policy.
Why businesses need trade credit insurance?
- Your sales team can go out to expand new revenue sources without fear of acquiring bad customers.
- You can expand to overseas foreign market with less fear and risks.
- Bankers are assured you are protected and allow you more business loans, credit and even provide lower interest rate for your financing.
- Reduce risks of 1 big customer defaulting and affecting the entire business operations.
- Able to provide credit limit to new or expanding customers to help them gather more profits and therefore increasing your profit.
- Improve your invoice and debt collection effort of your company
In Singapore, large companies are no stranger to trade credit insurance, buying them to expand their scope and improve their finances. It is usually the small and medium enterprise that tend to ignore trade credit insurance, which is a pity because they are the ones that benefit most from trade credit insurance. Trade credit insurance can improve your professionalism and efficiency and helps you to expand new clients, new markets and diversify your revenue sources.
Do I need trade credit insurance?
You need trade credit insurance if you
- sell goods or services on credit term and exposed to non-payment risks
- are a sole proprietorship or small business that cannot survive on large customer default.
- department of a medium or large business that seeks assurance of revenue and profit