Managing a company’s cash flow can be a tough task, especially when company managers cannot always rely on their clients to punctually pay what they owe. Certainly, being left in payment limbo is a far from healthy position for any business organisation to be in.
Thankfully, companies can avoid such situations by investing in reliable trade credit insurance policies. These policies, also known as bad debt insurance or accounts receivables insurance policies, can be a very worthwhile investment, especially in the current economic climate.
Although the concept of credit insurance has been around for a long time, it has only become widely accessible and affordable in recent years. The concept itself is simple: the insurance policy covers a company’s accounts receivables so that they are suitably insured in the case of non-payment.
All a business organisation needs to do to set up a credit insurance policy is draw up a list of the accounts they want covering and then present it to the credit insurer. Their underwriters will then investigate those specific clients and approve the ones which the most suitable policy would cover. If the organisation in question is happy with the terms offered, they will then pay the insurance company a monthly premium which is based on the creditworthiness of their clients and the amount of credit they’re extending to that client.
As part of the service, the underwriters will continue to monitor the financial health of an organisation’s clients over time so that they can deliver regular reports about their financial situations. This means that a suitably insured business organisation will be the first to know if any of their clients are about to experience a dip in fortunes.
Without doubt, trade credit insurance can help business organisations of all kinds to better manage their cash flow.
For more information please visit – www.eulerhermes.co.uk/en/
