Managing Risk through Trade Credit Insurance

The news of winning business overseas is quite exciting. However, people sometimes overlook the risk that comes with exporting products to a new land. One of these risks is that of failure to receive payment due to a number of reasons including falling prey to trade scammers or because of political unrest among other factors.  Such risks cause uncertainty and that is why insurance is crucial to give one peace of mind regarding the unknown future. With trade credit insurance - NicheTC, one feels more secure with account receivables. Through trade credit insurance policy, one can be able to recover overdue receivables.

Why exactly do you need trade credit insurance?

There are various reasons why credit insurers such as trade credit insurance – NicheTC will prove important to a trader who makes credit sales. You need trade credit insurance because:

  1. A customer could become bankrupt: Cases of bankruptcies are not rare and they make it impossible for a trader to collect in full the amounts owed by such customers.
  2. Interruption of foreign trade: Typically, some unforeseen issues could affect foreign trade. Sometimes a government that comes in place could deny trade permit, which definitely affects international trade. Similarly, there could be delays in communication, which in turn delays payment. With trade credit insurance, the chances of recovering your money increases.
  3. Providing a competitive edge: A trader who has credit insurance is able to extend more credit for more days, which is a competitive advantage for such a trader since people will go for the better pay terms where they are given more credit and more time to make payments.
  4. Attract financing: Nobody aims at remaining where he or she starts with the business. It is the aim of every businessperson to expand operations and grow the profits. Sometimes one will need some loan to do so. However, lenders will want to extend loans to people who are less risky. Having trade insurance makes one a less risky borrower and therefore one can be considered for a loan unlike when the account receivables are unsecured.

trade credit insurance - NicheTC

Choosing a trade credit insurer

While there are many insurance firms and brokers providing trade credit insurance, including trade credit insurance – NicheTC, it is always necessary to do enough homework to be able to choose the right one. Various things you should consider in choosing a trade credit insurance provider include but not limited to:

  • Provider’s willingness to be a good partner: You must identify a provider who is willing to learn and understand your business. A provider who wants to become a true partner is not only interested in a one-time transaction, but rather will want a long-term relationship with the insured. Therefore, such insurers will keep in contact with the insured.
  • Provider’s knowledge of the supply chain: Notably, most bad debts originate from the supply chain. A good supply chain ensures on time deliveries free from error. The insurance provider must, therefore, understand the risks in the supply chain.
  • Insurer’s ability to evaluate customers: The insurer has enough resources and data to help the client in evaluating customers to know when to extend credit. Hence, a good insurance provider should help in making fast client evaluation.

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