Any business that delivers on credit on a business-to-business basis can, of course, take out credit insurance. But why should you? Because isn't it expensive, such insurance? And can't we just make sure that our customers pay on time ourselves? And surely you can check yourself whether a customer is creditworthy? All true. And yet there comes a point when insurance yields more than it costs. For instance, if you tap new markets or get new unknown customers. You run a higher risk if you have no experience. And what if you start exporting to a country still unknown to you? Are you familiar with the customs and trade practices? Or you have high outstanding receivables, then the risks are correspondingly high. Especially if you are working with low margins. If you have a margin of 4% on an unpaid receivable of twenty thousand euros, you have to make half a tonne of extra sales to offset the loss. That's quite a lot. And what if you have a long average payment period? Then receivables are outstanding longer and you also run a higher risk. And do you work seasonally? High peaks, high risks!
Preventive and positive
So plenty of reasons to consider credit insurance. But there is more! Credit insurance provides excellent security for finance companies, on the basis of which higher or more favourable loans are granted. Apart from that, you always get the latest information on debtors, worldwide. And those debtors generally pay faster to suppliers who have credit insurance. So it also works pre-emptively, reducing the likelihood that you will do business with a bad payer and should a problem arise, collection costs are included in the insurance.
Night-night for later!
All in all, enough reasons to jettison your initial reservations and dive deeper into the benefits of insurance. Not just for your own peace of mind and good night's sleep, but certainly for the security and continuity of your business. Stay awake for a while to get your bearings and feel free to ask for advice!
