Should you be thinking about Trade Credit Insurance?
As a business owner, imagine the repercussions on your business if one or more of your main customers or contracts failed to pay a sizeable invoice, perhaps following bankruptcy. Your most valued customers or contracts may appear strong but behind the scenes they may be in debt, unable to pay your bill and ready to fold. When would you find out? Probably when it is too late to get your money.
While this may seem an extreme and ‘won’t apply to me’ scenario, there are signs in the economy that businesses are struggling to stay afloat. Your business may be healthy, but it’s only as good as your suppliers, your contracts and your customers.
Mike Clark, chair of the BIBA Trade Credit Working Group, said: “Recent statistics from the Insolvency Service show a 15% increase in company insolvencies for Q3 2017 which is troubling. The prospect of higher UK interest rates, uncertainty over Brexit, the impact of more restrictive US trading policies and even political uncertainties in Spain are reasons why companies of all sizes might want to consider reviewing the ways they can mitigate their exposure to bad debt.”
Credit Insurance protects businesses should a debtor become insolvent or fail to pay a long outstanding debt; it can also keep a track of the credit strength of customers and suppliers. It is also something that needs to be on the table when discussing your commercial insurance portfolio.
Duncan Sutcliffe, director, Sutcliffe & Co, commented: “Markets, both local and international, have been relatively stable in recent years, leading to many businesses trading with confidence. However, there are worrying signs that this stability is no longer the status quo and now is the time to take action to protect your business.”
It is not just SMEs that need to take steps, even large corporations are affected: the recent insolvencies of Monarch Airlines and Misco, the computer reseller, are evidence of that.
Duncan concluded: “Now is the time to discuss this with your insurance broker, if you haven’t already: get the protection you need to avoid a potentially damaging situation that’s outside your control, before it’s too late.”