When you have a business where credit is important, which would be most of them, there is a definite need for what is known as credit insurance coverage. This can be very crucial for your business. There are several reasons why this is so.
Bad Debt Protection
When insurance protects you from the risk of a client leaving you with bad debt, you can much more easily allocate your resources and convert them to something more useful such as working capital. There is no reason to set aside funds to cover potential losses from bad debt because this type of debt is covered by the credit insurance plan.
Bolsters Working Capital
Not only does having credit insurance help you with working capital that you already have in your balance sheets, but it gives you easier access to credit because lenders know that you are not at risk of being stuck with bad debt. Credit insurance can also act to replace letters of credit which can be expensive to procure.
Credit Management Expertise
By purchasing credit insurance coverage, you have access to credit risk experts that will advise you on how much credit to extend to each individual client. This allows you to more properly streamline your business. There is also the removal of fear of not getting paid by offering extended credit terms so you can attract more customers. In the event a client defaults on payment terms, the insurance agency will advise you on hot file a claim and as well as salvaging business relationships.
For more information, contact Trade Risk Group at https://www.traderiskgroup.com