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Improve your cash flow with a trade credit insurance

Delivering on credit is a powerful tool for bringing in new customers and retaining existing ones. However, it can also have a negative effect on your cash flow. Learn how a trade credit insurance improves your cash flow.

Why do you want to improve your cash flow?

Cash flow is an important KPI. It is a good measurement tool to assess your financial position. Banks and other lenders also look at the development of your cash flow when applying for financing.

Negative cash flow means that your business spends more money than it brings in. It's no big deal if cash flow is negative for a certain period, such as when you make a big investment. But if your cash flow is negative for too long, it can have significant consequences.

It's good to examine the causes of negative cash flow. Is it due to disappointing sales, are you holding inventory too long, or are your customers paying worse? You can address these issues to improve your cash flow. In this article, we explain you more about that.

improve-cash-flow

What is the impact on your cash flow if you deliver on credit?

Delivering to customers on credit has advantages: you can trump the competition or offer more financial leeway to your customers. But by making this delivery, you also create an outstanding receivable. This debt has a negative effect on your cash flow: it is a debt that will not be paid until a later date. Moreover, you expose yourself to credit risks such as late payment or no payment at all. Your receivable can then become a bad debt, which can lead to a write-off of your accounts receivable.

In practice, it is difficult to get outstanding invoices paid after all, especially if your customer goes bankrupt. So, you need to be prepared to deal with late payments.

Invest in efficient accounts receivable management and collection, possibly through a collection agency. Realize that internal collection involves significant costs in terms of human and technological resources. Costs that an SME is often unable or unwilling to pay.

How do you improve your cash flow?

  1. GOOD CREDIT MANAGEMENT
    Unpaid invoices have a negative effect on your cash flow. Ensure professional accounts receivable management. Instead of waiting for an outstanding invoice to be paid, start a transparent dialogue and make agreements with your customer. Record these agreements and ensure good general and delivery terms and conditions.
  2. THE RIGHT CUSTOMERS
    When it comes to protecting cash flow, it is also important to choose the right customers. Before doing business with a new customer, check their creditworthiness, payment history and financial status. And check that your contact is authorized to sign.
  3. TRADE CREDIT INSURANCE
    Even if you think you've picked the right customers and have your cash flow management under control, you can't avoid cash flow problems. Fortunately, there are ways to protect against cash flow problems. For example, our trade credit insurance can help your business protect itself from credit risk, ensuring business growth.

How can a trade credit insurance help improve your cash flow?

Informatie over de financiele situatie van jouw klanten
Financial Information
We monitor the financial situation of your customers and prospects. We share this information with you. This way you choose a financially healthy client portfolio.
Kies de juiste klanten en markten om zaken te doen
Debt collection service
Is a customer not paying? Then our collection team will work for you to still collect your money. This saves you time, money and energy!
Wij betalen de schade die jouw bedrijf oploopt als klanten de facturen niet betalen
Coverage against damage
If we fail to collect your unpaid invoices, we will compensate your loss. This way you avoid write-offs on your debtors.

Benefits of a trade credit insurance for your cash flow

  1. Compensation for non-payment
    With a trade credit insurance, you ensure that you get compensation quickly if your customer doesn't pay. This immediately improves your cash flow position and the uncertainty about your cash inflow decreases dramatically.
  2. Improve your DSO (Day Sales Outstanding)
    Your DSO is the average number of days it takes to receive payment after a sale has occurred.
  3. Reinsurance financial partners
    Taking out trade credit insurance says something about the financial stability of your business. This will make banks and investors more likely to guarantee financing.

A trade credit insurance is an essential tool for balanced cash flow management. It allows you to fulfill your commercial ambitions while managing the risks that delivering on credit poses to your cash flow.

Start protecting your cash flow today!

Do you want to know how a trade credit insurance can help your business protect or improve cash flow? Then contact us directly for more information or to set up a non-binding appointment.