Is the risk of your new customer defaulting on payment terms keeping you awake at night?
Perhaps you have received your biggest order ever from an existing customer, but you are nervous about that level of exposure?
Maybe you have considered Trade Credit Insurance or Bad Debt Protection with your bank/funder and are unsure which option to go with?
Let’s take a look at the options and compare Bad Debt Protection vs Trade Credit Insurance:
|Trade Credit Insurance||Bank/ Invoice Finance Bad Debt Protection|
|Covers losses occurring from customer insolvency||Yes||Yes|
Covers Protracted Default
(when a solvent company pays late or fails to pay at all)
|Covers International customers||Yes||Yes|
|Direct access to insurer/cover provider||Yes||No|
|Risk information on financial stability of your customers||Yes||No|
|Whole Turnover Policy||Yes||Yes|
|Single Invoice Policy||Yes||No|
|Single Risk Policy||Yes||No|
|Agreed Accounts Policy||Yes||No|
|Pre-Credit Risk Cover||Yes||No|
|Tailored Policy to cover the way you trade||Yes||Yes|
|Can only be in place if you have an Invoice Finance facility||No||Yes|
|Policy Run off||Yes – if Risks Attaching||No – as Losses Occurring|
|Account manager focussed only on your bad debts cover/insurance and not finance facility as well||Yes||No|
What does this all mean?
The best trade credit insurance policy offers predictive protection by providing credit data and intelligence designed to help companies improve their credit-related decision-making and credit management.
This in turn can save staff time and resources you would have spent on accounting processes and on the collection of the debts.
The goal is to prevent losses from bad debt.
No company can avoid bad debt entirely, the trade credit insurance policy is in place to cover losses that occur.
Not only are you protecting your business against future losses, the added intelligence assists with your pursuit of growth.
Trade Credit Insurance provides businesses with protection against failure and substantial delays in receiving payments. What may seem catastrophic at first is bearable with a policy structured to fit your business requirements.
For any Trade Credit enquiries, contact one of our experienced brokers today.