27 July 2023

Trade Credit Insurance

The business landscape has had, and continues to have, a large number of factors that have caused uncertainty. The Covid-19 pandemic, Brexit and the war in Ukraine come to mind, but inflation, rising living costs and the struggle to attract and retain talent are all also playing their part, and insolvencies are increasing to pre-pandemic levels.

UK businesses need to balance the opportunities and risks that they are presented with. Business growth without the right protection could leave your company exposed.

But what does this mean?

Well, if you operate at a 10% profit margin, and you experience a bad debt loss of £50k, then you will need to turnover an additional £500k just to break even. Can your business realistically generate an extra half a million pounds in turnover to offset this loss?

Unfortunately, accounts receivable is often the only major asset that a business doesn’t insure. You insure your buildings, machinery, vehicles and even your staff… why would you not insure your accounts receivable? Particularly given that there is a larger chance that a business will experience loss within their accounts receivable than any other asset.

How does Trade Credit insurance work?

Information

Your insurer provides information that can help make better decisions for your business. This includes gaining access to market information that is not available on public records to give you stronger insights into your clients. This gives you the information to choose companies you want to deal with and maybe increase workloads with, and those you may choose to be more cautious over.

Protection

Trade credit insurance – this protects you against losses due to bad debts. With bespoke industry wording you can receive up to 90% cover on up to 120 days Terms of Payment.

Advance payment protection – this offers peace of mind when taking opportunities in new markets. It insures against non-delivery of prepaid goods or services or non-refund.

Mid-term cover – on single contracts and longer-term exposures. Mid-term cover protects against non-payment of invoices, as well as WIP costs, under a contract.

Leasing cover – protects against non-payment of instalments under a leasing agreement, when leasing plant and manufacturing machinery.

Collection

Any debt collection will be handled by the insurer, who collected 65% of UK debt payment within 60 days.

How will this benefit my business?

Trade Credit insurance gives you the peace of mind that you need to make decisions with confidence, onboard new customers and increase volume with existing customers, knowing that you have security in place. This can help to reduce credit control costs and increase cashflow and profit.

Have more questions?

Give our team a call on 01270 758070 to discuss how trade credit insurance could help protect your business or contact us.

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Our Location

The Grove, Mill Lane,
Wheelock, Sandbach,
Cheshire, CW11 4RD.
Telephone: +44 (0)1270 758070
Fax: +44 (0)1270 758059

R.K. Henshall © 2024

R K Henshall & Co Ltd are Independent Intermediaries and are authorised and regulated by the Financial Conduct Authority. Registration Number: 308865. Directors: J.R. Henshall B.A.(Hons) ACII Cert CII (FS), A.J.Simpson ACII, A.Brown FCCA. Written quotations, policy terms, conditions and exclusions are available on request.
Company Secretary: A.Brown FCCA. Registered No. 01285024

R K Henshall are very proud to support Lupus UK. Lupus UK is a charity very close to our hearts. Unfortunately, Nita Davies who had been a stalwart of our company from it’s very beginning lost her battle against this terrible illness in 2013. Lupus UK is the only National Charity which supports people with the immune system illness. (Registered charity nos. 1051610, SC039682) Click here to read more about Lupus UK.