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Who Needs Trade Credit Insurance?

The Top Signs It’s Right For You

Wondering if trade credit insurance is right for your risk management strategy? While it’s a powerful way to protect your accounts receivable and your balance sheet when extending goods and services on credit terms, it may not be right for everyone. 

So, how can you know if it’s a good fit for your company? Who needs trade credit insurance? In this article, Niche Trade Credit will take a look at a few of the top signs that it is right for you. 

  1. You Regularly Trade With Customers Who Have A High Credit Risk

If you regularly sell goods and services on credit to customers who have a relatively high risk of default, trade credit insurance is definitely right for your company.

Selling to companies with a higher credit risk is not always a bad thing – in fact, it can be very profitable, because many firms will refuse to sell goods or services on credit to those with poor credit. 

However, there is always the risk of default. But with trade credit insurance, you’re protected from protracted default. It protects your business and your credit portfolio when you can sell to customers with high credit risk. 

  1. You’re Engaging In Trade In Developing Countries With Political Risks

This is another sure sign that you need insurance. Working in developing countries can be lucrative, but also risky. Political turmoil and upheaval, central banking issues, and sudden folding of private companies are all common issues. 

But with trade credit insurance – and its close relative, political risk insurance – you can protect yourself from these risks, and continue to do business in these markets

  1. You Want To Limit Bad Debts 

Bad debts can be a big cash-flow drag. If you want to limit bad debts in your credit management strategy and avoid the expense of trying to recover bad debts, then credit insurance is a must. You can get paid even if your partner companies fail to pay – or even enter bankruptcy.

  1. You Need To Preserve Your Working Capital & Cash Flow

If you run a small-to-medium-sized enterprise (SME), chances are that you don’t have the same amount of working capital or cash flow as a larger company. An interruption – such as a major client entering bankruptcy or defaulting on a debt – can be catastrophic. Until the issue is resolved, you may have to take actions like taking out loans, freezing raises or even letting employees go.

Your trade credit insurance policy will help cover the cost of the unpaid debt, ensuring your working capital and cash flow are preserved.

  1. You Want To Offer Better Credit Terms To Customers 

Using trade credit insurance allows you to offer better credit limit options and payment terms to your customers. Because your credit insurance policy will cover your costs if your client defaults, you can afford to offer better terms – and beat the competition. 

You can extend credit limits and repayment terms with confidence, knowing that you are protected in the rare event that your client does not pay in a timely manner.

Is Trade Credit Insurance Right For You? Find Out With Niche Trade Credit Now!

At Niche TC, we provide your business with the protection it need. As a leading trade credit insurance broker, we can help you through the entire process. Contact us today on 02 9416 0670.

*DISCLAIMER: No person should rely on the contents of this publication without first obtaining advice from a qualified professional person. This publications sold on the terms and understanding that (1) the authors, consultants and editors are not responsible for the results of any actions taken on the basis of information in this publication, nor for any error in or omission from this publication; and (2) the publisher is not engaged in rendering legal, accounting, professional or other advice or services. The publisher, and the authors, consultants and editors, expressly disclaim all and any liability and responsibility to any person, whether a purchaser or reader of this publication or not, in respect of anything, and of the consequences of anything, done or omitted to be done by any such person in reliance, whether wholly or partially, upon the whole or any part of the contents of this publication. Without limiting the generality of the above, no author, consultant or editor shall have any responsibility for any act or omission of any other author, consultant or editor.

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What Experts Think

Top 5 Benefits Of Trade Credit Insurance For SMEs

Wondering why trade credit insurance is so important for small business owners? In this article, Niche Trade Credit will take a look at just a few of the benefits that this type of insurance can have for small businesses – from better credit management to protecting you from bad debt and more. Read on, and see how trade credit insurance can help you grow your business, minimize credit risk and give you peace of mind. 

  1. Protect Your Cash Flow & Your Business

Most small business owners do not have a lot of spare cash – most of your money likely is being re-invested in your business, and is being used to help your company grow.

That means a cash flow interruption – such as when a customer fails to pay a major invoice – can be seriously damaging to your company.

Even just a few bad debts in your accounts receivable can interfere with your ability to grow your business – and could even put its future in jeopardy unless you can secure additional funding for day-to-day operations until the debt is recovered.

This is not a concern with trade credit insurance. Should a customer fail to pay, the insurance company will pay out – and you can continue to run your company normally, without worrying about the negative impact of unpaid invoices on your cash flow. 

  1. Extend Better Credit Limits And Terms

You can offer more generous credit limits and terms if your trade receivables & cash flow are protected by trade credit insurance. This can help you compete with larger companies who may offer large credit limits of hundreds of thousands of dollars, and 60-90 day net payment terms.

  1. Expand Your Business To Developing Countries

The political risks of working in a developing country are mostly mitigated by trade credit insurance. You can even bundle this product with political risk insurance as part of your risk management strategy – which will make it even safer to do business in new countries. 

  1. Avoid Costly Debt Collection Services & Legal Fees

Debt collection is expensive and often ineffective, and legal fees can add up if you sue a company for its unpaid invoices. With trade credit insurance, you don’t have to concern yourself with legal action or debt collection. 

If a customer fails to pay, your insurer will simply pay you according to your policy, and then it will be their responsibility to attempt to collect unpaid debt. It’s just that simple.

  1. Get Peace Of Mind Knowing Your Business Is Protected  

Above all, trade credit insurance for SMEs gives you peace of mind. You’ll know that, even in the event that multiple clients default, or political turmoil impacts your business, you will be protected, and your business can continue to survive – and thrive! For that reason alone, it’s worth investing in a trade credit insurance policy.

Want To Learn More About Trade Credit Insurance For SMEs? Contact Us Now!

At Niche Trade Credit, we’ve been in the insurance industry for more than 30 years, and we specialise in trade credit insurance and political risk insurance in Australia. If you’re the owner of an Australia SME, and you are interested in learning more about how to protect your company, contact us now. 

As experienced insurance brokers in Australia, we can help you understand the benefits of trade credit insurance – and whether or not it’s right for your company. Get in touch today on 02 9416 0670.

*DISCLAIMER: No person should rely on the contents of this publication without first obtaining advice from a qualified professional person. This publications sold on the terms and understanding that (1) the authors, consultants and editors are not responsible for the results of any actions taken on the basis of information in this publication, nor for any error in or omission from this publication; and (2) the publisher is not engaged in rendering legal, accounting, professional or other advice or services. The publisher, and the authors, consultants and editors, expressly disclaim all and any liability and responsibility to any person, whether a purchaser or reader of this publication or not, in respect of anything, and of the consequences of anything, done or omitted to be done by any such person in reliance, whether wholly or partially, upon the whole or any part of the contents of this publication. Without limiting the generality of the above, no author, consultant or editor shall have any responsibility for any act or omission of any other author, consultant or editor.

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What Experts Think

The Biggest Political Risks For Businesses In 2019: A Brief Overview

Trade wars, turbulent financial markets, and an ever-shifting political landscape have characterized most of 2019. While the global economy still seems to be strong and emerging economies continue to grow and contribute more to the economy, there are global risks that could threaten it in both the short-term and the long-term.

What are the biggest political risks for the global economy – and businesses – in 2019? In this article, we’ll take a look at a few top risk factors and potential issues for business throughout the world. Let’s get started now. 

Trade Wars Between China And The United States

President Donald Trump has shown an unwillingness to bend to trade deals with China’s President Xi Jinping, and this could mean the beginning of a prolonged trade war. If the United States begins as long-term trade war with China and tariffs and penalties continue to build, the global market and countries like Australia could be caught in the crossfire.

Unrest In The Middle East Affecting Oil Prices And Volatility

The low price of oil in the Middle East has pushed Middle Eastern politics back into the spotlight – and things like deteriorating US-Iran relations, airstrikes on Saudi oil fields, and the recent death of U.S.-based columnist Jamal Khashoggi in Saudi Arabia could all threaten to spike oil volatility. 

This, in turn, would have a major effect on global trade by raising the costs of transporting products throughout the entire supply chain, causing higher fuel costs for consumers (which could reduce spending) and more. 

A No-Deal Brexit For The United Kingdom

After replacing the controversial Theresa May, Prime Minister Boris Johnson of the United Kingdom has made his goal of an October 31 exit from the European Union a cornerstone of his policies – but a no-deal Brexit could be disastrous.

In a no-deal Brexit, the UK would leave the EU without any agreements about trade deals, tariffs, law enforcement… the list could go on. This would throw both the UK and EU into turmoil, and cost Britain more than 16 billion dollars. The economic ripple effects of a no-deal Brexit could go much further, and affect both all of the European Union – and the world.

Escalation Of Territorial Disputes In The South China Sea

Tensions between China and both the Philippines and Vietnam over the South China Sea have recently cooled. However, the South China Sea is home to more than 11 billion barrels of untapped oil and 190 trillion cubic feet of natural gas, according to the latest estimates.

Because of this, tensions over the sovereignty of the South China Sea could continue to increase in future years. Most political observers believe that there is a low likelihood of armed conflict. But in the rare event of an event like an armed China-Philippines conflict, the conflict could easily escalate to include other world superpowers like the United States.

Know What Factors May Affect Global Trade And Business In 2019 & Beyond!

Whether you’re in Australia, Oceania, or anywhere else in the world, these political risks could pose threats to your business. We recommend staying up-to-date with the latest news and updates, and keeping an eye on these situations as they continue to develop.

In addition, you can take steps like purchasing trade credit insurance or political risk insurance to protect your overseas interests. To learn more, just contact Niche Trade Credit now.  Call us today 02 9416 0670.

*DISCLAIMER: No person should rely on the contents of this publication without first obtaining advice from a qualified professional person. This publications sold on the terms and understanding that (1) the authors, consultants and editors are not responsible for the results of any actions taken on the basis of information in this publication, nor for any error in or omission from this publication; and (2) the publisher is not engaged in rendering legal, accounting, professional or other advice or services. The publisher, and the authors, consultants and editors, expressly disclaim all and any liability and responsibility to any person, whether a purchaser or reader of this publication or not, in respect of anything, and of the consequences of anything, done or omitted to be done by any such person in reliance, whether wholly or partially, upon the whole or any part of the contents of this publication. Without limiting the generality of the above, no author, consultant or editor shall have any responsibility for any act or omission of any other author, consultant or editor.