It means recognising an opportunity, acting quickly and being aware of what is at stake and taking steps to mitigate the risk. Unfortunately, there is one considerable commercial risk that many companies take for granted until it is too late.
Offering credit terms is essential to really compete and win new customers. However, it means that a company’s trade receivables – the money it is owed on account – could typically represent 35% of its balance sheet.
It’s simultaneously a major asset and a huge potential financial liability when you consider the serious threat that a large bad debt poses to the company’s health and even survival.
If you are reading this guide, it’s a good sign that you take this risk seriously and already have some mitigation measures in place. However, in the current unsettled economic and political climate, you may be considering other ways to protect your business, including the option of a credit insurance policy.
This Quick Start Guide to Credit Insurance provides straight-forward information about what credit insurance is, how it works and what to consider when obtaining a policy for your business. We’ve tried to keep it jargon-free but where this is unavoidable, you’ll find a definition in our glossary of credit insurance terms.
The guide is not exhaustive – we know your time is short – but we believe it will be a useful introduction to the basics which will help you make an informed decision.