Trade credit insurance is a valuable tool for businesses of all sizes, protecting them from financial losses due to non-payment by customers. Despite its benefits, there are many misconceptions about trade credit insurance that can prevent businesses from taking advantage of this important coverage. On LinkedIn this week, the Impello Global team explored a number of these misconceptions in detail, and would like to share the most common ones in this blog.
Myth #1: Trade credit insurance is too expensive for small businesses - While it is true that the cost of trade credit insurance varies depending on the size and risk of your business, there are affordable options available for small businesses. For example, a small business that sells office supplies may pay only a few hundred dollars per year for trade credit insurance, while a larger business in a high-risk industry like construction may pay several thousand dollars. Regardless of the cost, trade credit insurance can be a cost-effective way to protect your business from financial losses.
Myth #2: Trade credit insurance only covers domestic transactions - Trade credit insurance can cover both domestic and international transactions, making it a valuable tool for businesses that operate globally. For example, a small business that imports clothing from China can purchase trade credit insurance to protect against non-payment by their Chinese suppliers.
Myth #3: Trade credit insurance is only for businesses in high-risk industries - While trade credit insurance is particularly important for businesses in industries with high levels of financial risk, any business that extends credit to customers can benefit from this coverage.
Myth #4: Trade credit insurance is only necessary for businesses that sell to large corporations. - Any business that extends credit to customers is at risk of non-payment, regardless of the size of the customer. Trade credit insurance can provide valuable protection for businesses of all sizes and industries.
Myth #5: Trade credit insurance is only necessary for businesses with high levels of credit risk. - While trade credit insurance is particularly important for businesses with high levels of credit risk, any business that extends credit to customers can benefit from this coverage. For example, a small business that provides landscaping services may purchase trade credit insurance to protect against non-payment by their customers with lower credit scores.
In conclusion, trade credit insurance is a valuable tool for businesses of all sizes and industries, protecting them from financial losses due to non-payment by customers. Despite common misconceptions, there are affordable options available for small businesses, coverage for both domestic and international transactions, and benefits for businesses of all levels of credit risk and payment terms. With streamlined processes for setting up coverage and valuable protection for businesses of all experience levels and customer relationships, trade credit insurance is a smart choice for any business that extends credit to customers.