La Playa's advice on insuring against bad debt as economic uncertainty deepens

For many businesses, their largest asset (typically 40% of the value) is their sales ledger – which in many cases is completely uninsured. Credit Insurance is often poorly understood, but in times of economic uncertainty, it's worth finding out how it could help protect against bad debt.

Hanna Beaumont of La Playa writes:

What is Credit Insurance?
Credit insurance helps protect businesses against the risk of bad debt so that you can confidently get on with running and growing your business.

Why do you need Credit Insurance?
Non-payments can weaken your company and lower its investment capacity.  Trade credit insurance can protect your business against both commercial and political risks that are beyond your control. It improves the quality of your bottom line and helps you to grow profitably, minimising the risk of sudden or unexpected customer insolvency.  As well as helping you sleep at night by mitigating risks in your supply chain, it can also help you grow your business:

  • giving you the confidence to trade with overseas businesses, in the knowledge that they're "good for the money"  
  • helping you win business through offering better credit terms - safe in the knowledge that your cash flow is protected 

Imagine a key customer went into insolvency and couldn't pay you...

  • How would it affect your business, cash flow and staff?
  • How would you get your money back?
  • How would you make up for lost profits?

It could only take a handful of these debts to go bad before you're in trouble...  

Top 10 Reasons Companies Buy Credit Insurance*

1. PROTECTION
Credit insurance protects business bottom line from the impact of bad debt

2. GROWTH
It facilitates expansion by allowing to the business to deal confidently with new clients and increase credit lines to existing ones

3. BREXIT
In the light of economic volatility, it helps to remain competitive at home and abroad

4. PEACE OF MIND
Feel safe in the knowledge that your outstanding invoices are protected

5. EXPORT
Industry specific knowledge of underwriters helps companies to grow into the new markets

6. CASH FLOW
It complements and enhances existing credit control procedures to improve Days Sales Outstandings

7. SPEED OF DECISIONS
It helps to make the right decisions more quickly, improving efficiency and ultimately profitability

8. PROFITABILITY
Gains in profitability result from safely increasing exposure to more clients

9. INFORMATION
You can gain access to greater customer intelligence that leads to balanced risk decisions

10. DIGITAL
Open APIs and bespoke integration tools available for easy interaction

Credit Insurance is not for every business - but with these insights you can make a more informed decision.  For more information, email hanna.beaumont@laplayainsurance.com.  

*From our partners Euler Hermes



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