The ripple effects of global events have amplified economic volatility, heightening the risk of non-payment for businesses.
Nearly 50% of all B2B transactions in the UK are offered on credit, and recent statistics show 51% of B2B invoices are overdue, with 7% being a bad debt1. This can place a growing concern on the financial health of a company if payments are not received on time, or not at all.
With many businesses under significant pressure to manage increasing expenses and find growth opportunities, Trade Credit insurance can offer a vital safety net to help protect against the uncertainties of non-payment and bad debts. It can also support businesses in other ways with managing their budgets, future business plans and corporate governance obligations, benefitting both investors and stakeholders. Colin Cunningham, Gallagher’s National Client Development Leader for Trade Credit, explains how Trade Credit Insurance can help protect your business.
Enhanced cash flow stability
Maintaining a steady cash flow is essential for operational efficiency and strategic planning. Trade Credit insurance can ensure that receivables are protected, offering companies the confidence to plan and invest without concerns regarding the repercussions of unexpected financial disruptions.
Improved access to financing
Financial institutions may also view insured receivables favourably. When a business is found to have adequate protection against potential defaults on buyer payments, it enhances their creditworthiness. This can result in better access to financing and more favourable terms to support operations and the ability to seize opportunities with confidence.
Credit management support
As trade credit insurers track the financial health of companies, they can provide important, and early information and notifications on the likelihood of a customer default. This can assist a business to reduce exposure by avoiding further credit extensions to a particular supplier or buyer.
Facilitating growth and expansion
With Trade Credit insurance, companies can gain a competitive edge in the market by providing easier credit terms to their customers and entering new markets, knowing they are appropriately protected against potential debt repayment defaults. This could help to solidify new customer relationships and facilitate market expansion.
Protection from the domino effect
A single instance of non-payment can trigger a chain reaction, commonly known as the ‘domino effect’. This occurs when the insolvency of one company raises the likelihood of other related companies, such as suppliers, debtors, and customers, to experience cash flow difficulties due to unpaid debts from the initial insolvency. This effect can be felt throughout the supply chain and take place over many years.
“In every economic climate, whether stable or uncertain, Trade Credit Insurance can help safeguard your business against the risk of non-payment, empowering you to trade with confidence, invest strategically, and grow sustainably.”
—Colin Cunningham, National Client Development Leader, Gallagher Trade Credit
Partnering with Gallagher
As one of the largest trade credit insurance brokers in the UK, we have a team of highly skilled and experienced specialists who understand the complexities of the market. With strong relationships with a wide range of reputable UK and global trade credit insurers, we can work with you to design a customised solution that aligns with your risk appetite and business objectives.
If you would like to speak to Colin and the team about Trade Credit insurance, please click here.
