Updated: Nov 9, 2021
Trade credit insurance, also known as accounts receivable insurance, is a tool designed to protect businesses from risks including domestic and foreign customer insolvency, payment default, and political risks. Essentially, trade credit insures a company’s accounts receivable. Considering that accounts receivable is often a company’s largest asset, it is crucial to protect it. While it is important for companies to secure their business, trade credit insurance does so much more than simply mitigate risk.
If used correctly, trade credit insurance can help companies expand sales, improve borrowing capabilities, and lower their cost of capital. Trade credit insurance is such a unique offering because it is the only insurance product that should pay for itself. As we enter into a new year, many companies are looking for different ways to meet or exceed goals and grow revenue. Trade credit insurance is a great strategy to satisfy these business needs.
This sounds ideal in theory, but how does using trade credit insurance play out in practice? Let’s look at an example to find out.
One of the primary reasons that companies lose business to their competitors is not because their competitor has a superior product. Instead, it is because the competitors can offer more attractive payment terms to buyers. With trade credit insurance, companies can grow sales by offering more competitive terms without assuming additional risk and secure better borrowing capacity since the accounts receivable are insured. This allows companies to confidently expand their business to new buyers and new markets with reduced concern of non-payment.
So what’s the bottom line? Trade credit insurance is a unique tool which can help companies grow top line revenue and protect bottom line profits while improving bank credit facility options, pricing, and credit availability.
As we embark on 2021, Impello Global wants to help you optimize products and offerings to grow your business and meet your goals. Keep an eye out for our next blog post that will dive into the process of acquiring trade credit insurance to reap the benefits for your business.
About Impello Global
Impello Global is a US based trade finance advisory boutique and trade credit and political risk insurance brokerage. We specialize in trade credit and political risk insurance and provide advisory services to companies and lenders who are looking to expand their trade finance capabilities.
If you are a company or a lender trying to better understand trade credit insurance or EXIM Bank programs and looking for guidance about how these programs can help improve working capital financing, our team would be delighted to learn more about your business and discuss options available to you. Please visit our website at www.impelloglobal.com or contact us directly at firstname.lastname@example.org.