For organisations of any size, the prospect of one of your customers going out of business and leaving debts unpaid is a worrying thought. Not only could this have a significant impact on your cashflow, but with no safeguards such as credit protection insurance in place, your business could face insolvency.
The Association of British Insurers (ABI) has revealed that trade credit insurers paid out a record £1 million every day during the second quarter of this year to help firms cope with the non-payment of bad debts. Challenging trading conditions are putting pressure on many businesses, and with Brexit threatening potentially even tougher times ahead, Robison & Co. Insurance Brokers are urging businesses to consider investing in credit protection insurance to protect themselves from the risk of bad debts.
What is credit protection insurance?
Credit protection insurance (also known as trade credit insurance and business credit insurance) is a policy that businesses can purchase to protect themselves in the event that a customer, who owes money for products or services, does not pay, or pays later than the company’s payment terms.
Why should businesses have credit protection insurance?
Firstly, credit protection insurance will protect your business if a customer becomes insolvent and owes you money. Business credit insurance will pay out a percentage of the outstanding amount owed (typically up to 90%).
As a secondary benefit of business credit insurance, having protection in place to safeguard your business against bad debts can help with business expansion plans. For example, with a robust credit risk insurance policy in place, you can start to trade with a new customer who may not meet your credit requirements, with the peace of mind that if they don’t pay for whatever reason, your business won’t end up out of pocket.
In addition, credit insurance can help protect businesses against the risks of importing overseas and if you have expansion plans in mind, banks will typically lend more to businesses with business credit insurance in place.
What will credit protection insurance cover?
Credit insurance policies may vary, but our credit insurance policy covers:
• Up to 90% of commercial losses
• 95% of political losses (money that is lost as a result of a political event or government decision)
Simon Gubbins, Managing Director at Robison & Co., said: “Bad debt is an unpleasant fact of life for many businesses and can be seriously debilitating, even leading to company closures. Tough trading conditions are affecting many UK businesses and insurance pay outs are at their highest level since 2009. This shows the extent of the problems businesses face with bad debts and the need for a business credit insurance policy that is going to protect your business during these challenging times.
If you don’t have credit insurance in place, then now is a good time to consider it. These are uncertain times and a credit insurance policy will give you the peace of mind that you’ll be protected against bad debts and give you the flexibility to trade with more customers.”
For further information about credit insurance and how to protect your business against bad debts, contact Robison & Co. Insurance Brokers on: 01730 265500 or email firstname.lastname@example.org. One of our credit insurance experts will be happy to assess your level of risk and recommend a policy to meet your business requirements.
You can also download further details about our credit insurance policy here (provided in partnership with CMR Insurance Services).