Know More About Trade Credit Insurance

As we know that most businesses deliver their services and products only on credit terms. Accounts that are receivable are one of your biggest assets, and various accumulation of your unpaid invoices may seriously impact the cash flow of your business.

Therefore, easy solution will be to take trade credit insurance which can protect your business against all your debts because of default or customer insolvency.

This kind of insurance will be a tool for risk management which will cover your business for not only Australian but also for all overseas transactions.

Following are few questions that often the business owners may have in their mind which we have tried to provide answers.

  1. What is this trade credit insurance?

This is a policy which will run for 12 months and will cover all your accounts of receivables ledger in case of following two kinds of triggers:

  • In case of unexpected insolvency of your clients which can cover liquidation, bankruptcy and administration issues.
  • Various non-payments are also covered which may be either because of your customer skipping the payment or may not be found or any of you may have any court judgement.

2. Who will need trade credit insurance?

All those businesses who are selling goods and services to other businesses on credit terms will be able to get benefit from this credit insurance.

As those businesses that operate usually on credit terms can easily get exposed to either bad debts or any unpaid accounts. You can quickly keep on adding up to substantial amount in your receivable accounts.

Often your business model cannot be easily changed and hence you need certain easy way of mitigating these financial risks for protecting your profit and cash flow.

3. What benefits that trade credit insurance offer?

Following are few important benefits of this insurance for your business:

  • Cash flow relief

You may not be held hostage due to unpaid debts and your cash flow will always be maintained.

  • Insolvency protection

Inspite of your customer becoming insolvent, your business will remain protected against all these eventualities.

  • Increased sales

You can always offer better credit terms to your customers, can build stronger relationships to improve your sales.

  • Better bank financing

Banks will be more interested to lend money to your business because you are low risk client.

  • Trade with confidence

Even during highly competitive market, you can support better credit management and do your business confidently.

4. What type of coverages are available?

This insurance cover can be purchased for covering transactions that can be local, regional or even global and can also be tailored for covering all your accounts.

5.  How much trade credit insurance costs?

Cost for buying trade credit insurance may vary based upon many different factors which may include:

  • The kind of industry that you are involved with
  • Your history of various bad debts that you have incurred
  • Quality of your present internal credit procedures
  • Credit worthiness of all your current customers
  • Amount of cover which is needed based on your annual revenue

Importance Of Surety Bond Insurance Companies

In a volatile business scenario where it is hard to predict the outcome of any business activity, the importance of bond insurance companies assumes even greater significance than ever, because they are the ones who assure the investors about the safety of their investment, irrespective of the outcome of the invested project, assignment or contractual work. Especially in the context of projects or businesses related to construction, having an assurance that the investors will be paid the invested amount even in the event of non-completion of the project due to unforeseen circumstances is a great confidence boosting factor for investors to go ahead with their construction business without any hitches.

Importance Of Surety Bond Insurance Companies

If you are a contractor looking to grab a project, the first thing you will need is the backing of one of the surety bond insurance companies operating in this business, who cab back your credentials in the market and assure the investors that your delivery of the contractual work will not result in any loss of their money. And the only way you will be able to get that backing is by buying a Surety bond from that surety bond company. That’s precisely why the role of Surety bond insurance companies assumes a great significance in construction business anywhere is US.  

When a contractor presents a surety bond, the investors and the general public get an automatic assurance that the contractor has passed the rigorous criteria of a sovereign third party, which is a surety bond company in this case, and the surety bond issued by it ensures the following things:

  • It guarantees the completion of the project that has been bonded. 
  • It also guarantees that all the parties involved in the project including the laborers, suppliers, subcontractors will be paid for their services even if the contractor fails to complete the project as per the agreement. 
  • It relieves the project owners from the possibility of any financial losses in the event of non-completion of project. 
  • It also provides for a smooth transition from construction to permanent financing by getting rid of interests. 
  • It also diminishes the chances of a contractor redirecting money from the bonded project. 
  • It paves way for an intermediary to come in the mix in the form of the Surety Bond Company, where the project owners can voice their complaints and grievances about the delays in the project. 
  • It also contributes towards lowering the cost of construction in certain cases by allowing the use of competitive tenders.