No entrepreneur wants a customer who does not pay their invoice. Unfortunately, extreme inflation, sharply rising energy prices, and shortages of personnel and materials are leading to more and more defaulters. Would you like to know how trade credit insurance can guarantee the continuity of your company if customers fail to meet their financial obligations? Then read on.
As a result of the corona pandemic, the subsequent Russian invasion of Ukraine and massive inflation, the global economy is expected to plunge into a (severe) crisis. Energy bills are rising to extreme heights, fuel prices have skyrocketed and everyday groceries are also falling sharply in price. As a result, consumers are cutting back on their spending more often, which in turn is causing companies, which are already struggling, to lose revenue. Because they themselves have sky-high energy bills, are also facing personnel and material shortages, have to pay back the government aid they received during the corona pandemic, and because of rising interest rates they have to refinance other debts at higher interest rates.
The credit insurance
In short, more and more companies are struggling to keep their heads above water as their own costs rise sharply and as they face customers who can no longer pay their bills. The likelihood of a domino effect is high, because if one business owner can no longer pay his bills, at some point others will be unable to either.
Unfortunately, we do not have a solution to the expected financial crisis and rising inflation. But we do have a tool that can help you do business in a conscious and responsible way: credit insurance. Do you sell goods or services that require payment in arrears? With credit insurance you can insure the payment risk. If a debtor, for example due to bankruptcy, does not pay his bill to you, you can claim the loss amount from your insurer.
15 percent
Only 15 percent of Dutch companies have credit insurance. 'Far too expensive', 'credit insurance is only for large organizations', 'our customers always pay on time and don't go bankrupt' and 'I don't feel like the administrative hassle' are common arguments why entrepreneurs don't insure themselves against defaulting customers. We are happy to refute these arguments.
Price
Credit insurance costs on average between 0.075% and 0.35% of your annual turnover. The premium is determined, among other things, by your company's industry, the countries in which your debtors are located and his/her liquidity. Credit insurance is a flexible product, where the terms and clauses can be adapted to your organization and way of working. Certain "strong" debtors can be excluded from coverage. Furthermore, credit insurance has components such as debtor information and a collection procedure, which strengthen your debtor management.
Size
Whatever your turnover, a financial loss is unpleasant for any business. Credit insurance cushions the loss of non-paying debtors and ensures the continuity of your business. Your insurer covers the loss, so you can keep the focus on generating (new) business and growth.
Good contact
You have a good contact with your customer, who always pays on time. That's nice, but who says it will stay that way? Maybe they get into trouble because their suppliers default? If your debtor suddenly pays later than usual, there is often something wrong. With credit insurance, you don't become the brunt of your customer's problems.
Administrative hassle
Indeed, taking out an insurance policy involves administrative tasks. But we are happy to take care of those for you, so that you can focus on your business and don't have to worry if debtors don't pay your bills.
Questions?
Credit insurance safeguards the continuity of your business if customers default on their financial obligations. Would you like to know more about credit insurance? Then contact us. We will be happy to help you!
