Determine why you should involve credit risk insurance in a business

Claire Swift | February 11, 2016 | 0 | Financial Services

Before you go to the market for quotes, you should identify what your interest in credit insurance is, and how it can benefit your business enterprise. As a custom tailored financial tool, this coverage comes with many benefits despite the misconceptions about it. For instance, in Australia, reliable companies for credit insurance such as credit insurance by niche trade credit exist to help business people on bad credit related issues.

In addition, credit insurance is designed to protect you from unexpected losses due to insolvency or past due default on the part of your insured customers. Therefore, it is advisable to involve reliable experts who specialize in this coverage, to conduct credit evaluation on the accounts you wish to insure. They can approve accounts for specific credit limit based on their request, and the result from their research. Here are some reasons why you should go for credit insurance for your business.

Unexpected loss protection

In many companies and industries, experts suggest that approximately 20% of accounts represent about 80% of the company’s revenue. In some cases, the concentration of credit exposure among key customers can be greater. Therefore, if you consider your receivables as a concentration of all your cost and profit, then you can create them based on nothing but customers’ promise to pay.

This shows a tremendous amount of risk facing your business. Even with customers you trust, the risk of unexpected default may persist. Therefore, reliable experts for credit insurance by niche trade credit suggest that you should use credit insurance as a great tool to remove this catastrophic risk from your business.

Safe sales expansion

Many times, your customers would want to get more credit than you are comfortable giving them. Similarly, some of your new customers with whom you are not familiar with may seek meaningful amount of credit from you. While investing in professional credit practice to review these requests and limit your sales due to concern over the risk, credit insurance can be an ideal answer.

Many companies today use credit insurance to expand their existing credit limits, without putting themselves at additional risk. It also helps in covering open credit sales to new accounts, where you might have limited sales history and information. Involving a reliable credit insurance agency such as credit insurance by niche trade credit, can not only allow you recapture the premium, but also help you drop additional profit to your bottom line.

Credit decision support

As noted earlier, the underwriter of your credit insurance policy should research, approve, and monitor the accounts you want to insure appropriately. Involving a reliable financial analyst to do this work for you as part of your credit risk insurance program, can add a lot of expertise to your credit practice. This can allow you to focus your internal resources to cash flow management and collections work. Therefore, having the carrier watching your covered accounts and helping you evaluate credit limits on new risks can be a great advantage to the program.

For more information on reliable experts that offer credit insurance services, visit

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