Trade customers can increase the success of a business but they can come with financial risk. For this reason, financial protection is important for businesses that work with these customers. Credit insurance may be an extremely beneficial insurance option to consider.
Credit insurance helps businesses transfer some of the risk from the business to an insurer. This means that the policyholder has a level of protection if a customer becomes insolvent. If a customer becomes insolvent, they are no longer able to cover their debts. Without this insurance, an organization that gave products or services on credit may now find itself in a terrible situation.
Credit insurance is designed to help cover your business if a customer defaults. Customers who pay late is one thing but more serious situations may occur when a customer refuses to pay or is no longer responding to payment reminders. Of course, this is going to depend on the agreement between the individual providing the service and the individual or organization paying for the service.
In most cases, invoices need to be paid in 60 to 90 days. Once an invoice hits 180 days, the bill will usually be default. This is the point where an organization could take legal action against the customer to recover that money. However, insurance may be able to cover the gap while legal proceedings are ongoing.
Learn more about how insurance protects businesses and see what we do at the Trade Risk Group to help our customers by visiting our website.