Compared to their larger rivals, small and medium-sized businesses (SMEs) are particularly vulnerable to certain risks. For instance, they are especially susceptible to disruptions in the supply chain, which can severely impact their cash flow.
Being an SME in such a competitive environment requires some protection in order to protect their finances and maintain a steady cash flow. If you have a successful business, there are other external threats that can stump your growth and keep you coasting, which is never good. You want to be able to have the freedom to grow and to help remain competitive.
Compared to a large business, it might only take one customer not paying their invoice on time, which creates a domino effect and eventually topples these small businesses. This is where trade credit insurance comes into play and here’s how your SME business can benefit from it.
What is Trade Credit Insurance?
Trade credit insurance offers protection against the possibility that companies won’t get paid for the goods or services they sell. It also gives companies access to comprehensive data and advice on every facet of trade from professionals in the field. Trade credit insurance therefore offers the secret to profitable trade. It maintains the highest performance standards that only decades of global business support can bring, all the while promoting innovation.
Benefits of Trade Credit Insurance For SME’s
Freedom to Grow
As previously mentioned, trade credit insurance gives SMEs not only time back chasing invoices but also provides security and reassures them that at the same time every month, they have the exact number of funds, meaning they can move along with other areas of business and grow if they wish.
Even if you are a small enterprise that eventually wants to grow overseas, there are export credit insurance terms that can be made to fit within your business type.
Reduces Risk
In addition to enabling companies to take on bigger and new clients, it lowers their risks by giving them access to trustworthy customer data.
More Funding Opportunities
Lastly, trade credit insurance aids in the financing of businesses. In particular, small businesses must factor in their invoices. Investors and financiers feel more at ease knowing that the ledger is protected when credit insurance is in place.
Having trade credit insurance is particularly crucial in the current climate. We anticipate that the number of insolvencies will continue to rise due to the impact rising interest rates and the cost of living crisis will have on many businesses’ ability to control expenses and pay off debt. For this reason, we suggest that small business financial decision-makers purchase this cover.
Enhanced Cash Flow
With trade credit insurance in place, SMEs can confidently extend credit terms to buyers, knowing that they have a safety net if the buyer defaults. This can improve cash flow by allowing the business to offer more favourable credit terms while still mitigating the risk of bad debt.
Protection Against Political and Commercial Risks
Trade credit insurance can also cover political risks such as changes in government policies, currency exchange restrictions, or the imposition of trade sanctions. This broader coverage provides an additional layer of protection for SMEs engaged in international trade.