How does credit insurance work?

s-tech.co.uk

70 NEWS JAPAN - If a company runs into difficulties, it may not be able to pay its bills or might go out of business altogether. In this situation, there is no guarantee that creditors, such as your company, will be paid. Even if you do receive some of what you are owed, it could be many months down the line.

Read - How credit insurance works?

This is obviously a substantial business risk that is out of your control. The best way to protect against it is by taking out trade credit insurance. This protects your company’s bottom line and allows you to plan ahead and expand the business, confident that your cash flow won’t be disrupted by customer difficulties.

Having credit insurance in place will also give other parties confidence in your company’s resilience. This could make it easier for your business to get credit at better rates, as well as funding from other sources.

Read - How does credit insurance work?

These policies are designed to cover debts due within one year, often known as short-term account receivables. It applies to customers that do not pay within an agreed time limit, as well as those that become insolvent and aren’t able to pay at all. Your insurer will conduct a risk assessment on each company you deal with, analysing and monitoring their financial wellbeing and grading them accordingly.