Navigating today’s geopolitical and economic environment has never been more challenging for businesses. This is an era of compound obstacles like no other. Against a background of pandemic recovery, businesses are travelling a road lined with rising energy prices, volatile levels of inflation and war, all of which contribute to a perfect storm casting a long shadow over the prospects of trade worldwide.
Credit risk is widely viewed as a factor that needs to be controlled. But where a business has robust credit risk management in place, trading on credit terms can offer myriad competitive advantages. What’s more, it can clear your path to growth and part the clouds ahead.
Expand Your Business
Expanding the profitability of your business is not simple, and comes with numerous considerations and complexities.
When combined with robust credit management, providing goods or services on credit terms opens routes to growing your business that may have been previously obscured or closed. You may be able to increase trade by offering enhanced credit lines to existing customers, and by offering advantageous credit terms to new customers, with full knowledge any inherent risk is addressed and managed by your trade credit insurance and credit risk strategy.
Credit insurance in particular is an invaluable tool to clear the landscape of any uncertainties when trading with any customer on credit terms or moving into new markets or territories.
Improve Cash Flow
Your cash flow is the fuel that keeps you moving through the landscape of trade. Every business, regardless of sector, is likely to experience fluctuations at some time in their journey. Such ebbs and flows present at best an unnecessary source of concern, and at worst a realistic threat to solvency. As a result, particularly in the current economic environment, protecting and enhancing your cash flow has never been more vital.
Whether it’s through gaining valuable insights into the history and outlook of your customers, or through transferring any potential risk to an insurer, trade credit insurance has the power to sustain your cash flow, protect your cash reserves and ensure your continued trading, providing the solid ground your business needs to move towards a profitable future.
Gain Vital Insight
If you’re trading with a new customer, or working with an established client, it’s important to set credit limits which are justifiable and reflective of their size and creditworthiness. In-depth information of your markets and customers supports your credit management and enables you to make informed business decisions.
Credit status agencies can offer a snapshot of the financial health of a customer, but can be limited in scope. If your business requires a more detailed picture, credit insurers hold data on companies not in the public domain such as management accounts, business forecasts and payment experience, providing you with the map you need to navigate through the tricky terrain.
Create a Competitive Advantage
Just as credit risk management is a finely tuned machine with countless parts all working in conjunction, so too are the advantages that come with it. With the ability to trade at higher volumes, your business gains the extra gear you need to attract and retain new customers.
This competitive edge is also passed on to your clients, freeing up working capital that may not be available to their competitors that trade pro forma, giving them the manoeuvrability to adapt to market demands and seasonal variations.
Access New Funding
Growing your business can be a tricky and costly exercise. Outside funding can provide the capital you need for marketing, equipment, staff, premises or inventory but sometimes a sound business plan alone may not be enough to secure the investment.
Lenders are offered reassurance by the protection a robust credit risk management strategy provides. Put simply, businesses trading on credit terms, with trade credit insurance in place, are more stable. As a result, banks not only view such businesses more favourably, it also opens the door to new finance options and terms.
What Lies Ahead For Your Business?
Atradius’ recently published Payment Practices Barometer revealed that around half of all B2B invoices are settled past their due date. With the expectation of low domestic growth on the horizon for 2023, and insolvencies expected to surge by 23%, trade credit insurance is an invaluable tool to clear the landscape of any uncertainties and drive your business towards success.
Join Hannah Lyon-Wall of FinCred and Tracey Westell of Pecunia 2016 at The Finance Hub on November 7th as they use their unique expertise to guide you through every aspect of credit management, and how to maximise it for your business. This 2-hour masterclass is ideal for business owners, accountants, financial managers, lawyers, advisors on credit systems for businesses and more.
Visit thefinancehub.money to book your seat.