Credit Insurance (or Trade Credit Insurance) protects against any commercial and political risk outside a business' own control. By mitigating the impact of any sudden or unexpected customer insolvencies, it allows businesses to more confidently and realistically extend credit, build new customer bases and catalyse business growth.

Credit Insurance in Effect

Credit Insurance offers an effective safety net for what could otherwise be risky business, supporting short-term account receivables (i.e. where settlement is required within 12 months). Often issues arise as a result of a business customer liquidating or failing to comply with set terms and conditions (technically known as a Ĺprotracted default').

Risk Officers are assigned to assess the overall financial health and conduct of each of your customers before setting an appropriate Ĺgrade'. This grade then determines a realistic credit limit for each customer which in the event of a claim, can be compensated. This limit can be reviewed as and when customers build their own businesses and profits.

Why Credit Insurance Makes Sense

Trade receivables are a core asset on the balance sheets of many companies. Credit Insurance protects current and future cash flow, broadening the scope for profit and helping your business broaden its horizons.

Key benefits include:

  • Comprehensive protection against the risk of insolvency Improves customer relationships
  • Greater banking relationships and access to finance
  • Higher confidence in pursuing commercial opportunities

An added benefit of Credit Insurance is that it offers insight into your customer base as a matter of course, while you are simply aiming to ensure credit protection.

Credit Insurance Example

If your business has a profit margin of 5% and one of your buyers defaults on a debt of ú1,000, then you will have to produce additional sales to the value of ú20,000 to make up for lost profits.

Non-payment will weaken your company and lower its investment capacity. A Credit Insurance policy protects against this by mitigating losses in the event of non-payment.

MANNINGUK tailors Credit Insurance specifically to your business' size, industry and needs. Talk to us to find out how we can help you grow your business financially in line with your budgets.

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