Bad debts are no exception. Despite having followed all the steps to avoid default, you may still face an unpaid invoice. When a customer defaults on payment, you are faced with bad debt. This debt must be deducted from your company's accounts receivable. And this means a deterioration in your cash flow position and available working capital.
Protect your business against bad debt with a trade credit insurance
Uncollectible receivables due to non-payment can be detrimental to the success of your business. Fortunately, there are ways to manage this and reduce debtor risk. Discover how you can protect your business from bad debt with trade credit insurance.
How can you protect your business from bad debt?
One or two bad debts of small amounts may not have much impact on your business. When it comes to large debts or multiple unpaid bills, it can lead to significant losses. It may even increase the risk of bankruptcy for your own business.
Bad debts also complicate your company's accounting processes. In addition to monetary losses, they take up valuable time and resources of your staff as they try (unsuccessfully) to collect unpaid invoices. In these cases, the cost of protecting against defaulters and bad debtors is highly justified.
3 ways to reduce bad debt
- Make an allowance for doubtful accounts.
- Set stricter conditions
When extending trade credit, look at each customer's unique circumstances. In some cases, you may choose to avoid extending credit at all: require a Letter of Credit (L/C) to guarantee payment or ask for a prepayment before shipping. - In other cases, you may also want to change the requirements for extending credit to certain customers. For example, if customers in a particular industry or geographic area are struggling, you may require those customers to meet more stringent requirements before you extend credit. You can use the same strategy to manage credit risk for customers who have outstanding debts above a certain amount or who are a certain number of days late in paying your invoices.
- Take out a trade credit insurance.
How can a trade credit insurance help with bad debt?
If preventive measures do not provide enough protection, you can opt for an additional measure: taking out a trade credit insurance.
- This insurance provides coverage for losses due to unpaid invoices and bankruptcy of your debtors and at the same time it supports you to manage debtors more effectively.
- Our trade credit insurance offers predictive protection by providing insights that help you make credit-related decisions and improve credit management. And a customer doesn't pay? Then we handle collection for you.
- The goal is to prevent losses due to bad debt.
What is a trade credit insurance?
Information about debtors
Access our database with information on the financial situation of companies worldwide. This allows you to decide which customers to do business with, including those abroad.
International collection
Is a customer not paying? Then our collection team goes to work for you to still collect your money. You benefit from our collection network in more than 50 countries.
Claims payment
Do we fail to collect your unpaid invoices or does your customer go bankrupt? Then you will still get your money through our trade credit insurance.
A solution for every payment risk
Every business is different and so is the solution. We can tailor a policy specifically for your business to cover many other risks in addition to insolvency risks, including:
Protect your business against bad debt today!
By purchasing a trade credit insurance, you not only protect your business from future losses due to bad debts. You also take advantage of that protection because it helps you continue growth with new customers.
Do you want to know how a trade credit insurance can protect your business against bad debt? Then contact us directly for more information or to set up a non-binding appointment.
Fill in the form below and we will contact you by phone within 48 hours. You can also call us on 02 790 24 15