For many businesses, credit risk acts as a natural brake on growth. An attractive new customer may sometimes require a significantly higher credit limit than seems prudent. With the right credit insurance, the playing field shifts. This allows you to accept higher credit limits, fulfil larger orders from existing customers, accept new customers more quickly, offer longer payment terms, enter new export markets and make your receivables portfolio more financeable. The question of whether you can supply this customer then becomes ‘how much can I responsibly supply?’. A credit limit is then not just an insurance condition, but a commercial tool. The difference between a creditworthy limit of half a million and a commercial potential of one million can place a real brake on turnover.
Doing more business with confidence
When dealing with a new customer, particularly if it involves a large initial order, it is important to understand their ability to pay. Credit insurance provides an independent risk assessment, which often means you can make decisions more quickly and, consequently, generate turnover sooner. Longer payment terms are part of the competitive landscape in many sectors. But the longer the term, the longer you are effectively extending credit yourself. If you export, credit insurance also helps you gain an understanding of new markets first, so that you can enter them in a controlled manner. This is by no means a luxury, given the current political and country risks. Credit insurance is also relevant for your own financing. A sound, insured receivables portfolio often forms the basis for financing from banks or factoring companies. This allows you to support your growth without having to finance it entirely from your own resources.
More than just protection
As you can see, credit insurance is more than just a safety net for customers who fail to pay. It is a tool for conducting business more responsibly through active collaboration between sales, finance and credit management.
Want to find out more? Xolv not only helps you insure your credit risk, but we also help you make the most of the commercial and financial opportunities this creates.