A Simple Way to Protect Your Business from Unexpected Losses

When revenue streams are steady and sales are robust, it’s hard to picture anything other than continued success. But, if the last year has taught us anything, nothing is guaranteed in business. The financial standing of any small business can turn on its heels in an instant. Even if your organization is buffered from the direct fallout of an economic downturn, your clients might be hit hard—and lose the funding needed to pay off outstanding invoices or renew their contracts. 

It’s exciting to think about your business thriving. If you don’t prepare for the worst, however, your business may never reach its full potential. Trade credit insurance offers business owners a cost-effective way to guard against unforeseen risks by insuring receivables against market instability. 

What is trade credit insurance? 

Private or government-issued trade credit insurance is a product that protects foreign and domestic revenue streams from losses resulting from credit risks, such as protracted default, insolvency, or bankruptcy. In other words, trade credit insurance is a simple way to guard against financial risks and market instability. As an added bonus: when used strategically, trade credit insurance can also be a valuable sales tool or make your organization more attractive to global lending institutions. 

What are the benefits of trade credit insurance?

Become more attractive to lenders 

Many lenders do not lend against foreign receivables as eligible collateral due to the risks associated with conducting business across borders, like contractual enforceability, political instability, monetary policy, and more. By backing international payments with a trade credit insurance policy, organizations can offset the financial risks associated with foreign receivables and offer lenders the peace of mind they need to deliver a loan in confidence. 

Sell with confidence 

Trade credit insurance can also be an incredible asset to your organization’s sales team. Insuring both foreign and domestic sales allows you to increase sales by extending more flexible terms and taking advantage of new markets, while ensuring that your client’s payments are backed should they file for bankruptcy or fail to make a payment. That way, you can insulate your business relationships with an added layer of security and sell with confidence, even in a business environment fraught with market uncertainty. 

Preserve working capital

Even if your business has enough capital to replace short-term losses resulting from a failed transaction or a missed payment, there are better ways to be prepared for market downturns. Trade credit insurance can support your business through difficult financial environments by giving you the support you need to continue investing in areas of your business that will promote growth and, ultimately, avoid spending hard-earned resources dealing with unpaid receivables. 

Prepare today for tomorrow’s uncertainty 

As the global marketplace’s volatility continues to shake up every corner of the business world, reducing risk with a product like trade credit insurance is an easy, accessible way to improve business outcomes.

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