WHAT ORGANIZATIONS NEED CREDIT PROTECTION?
Any organization that offers or is planning to offer extended payment terms to customers should consider protecting themselves from the risk of customers defaulting on these debts. Since approximately 90% of B2B transactions involve some form of payment terms, most organizations will benefit from credit protection solutions such as credit insurance, international receivable protection and political risk protection.
Why protect your accounts receivable?
An organization's accounts receivable are often the largest asset on their balance sheet. They represent not only sales, but the assets for which many organizations borrow against for financing and working capital. Insuring the receipt of these receivables is critical for a business to grow and be successful. Many organizations leverage credit protection solutions to achieve the following gains:
Sales Growth in New Markets
By guaranteeing customer payments, credit protection solutions enable organizations to extend credit to new customers with confidence, venture into previously inaccessible markets, increase credit lines to existing customers, and offer more aggressive payment terms as a competitive differentiator.
Prevent Catastrophic Loss
Due to their unpredictable nature, customer bankruptcies or late payments often have a devastating downstream effect on an organization; such effects may include potential cash flow or liquidity crises or ultimately to the ceasing of operations. Credit protection solutions such as credit insurance ensure the receipt of payment for outstanding accounts receivable in the case of a customer bankruptcy or delinquent payment.
For organizations interested in financing receivables (asset based lending, factoring, etc), protecting them with credit protection solutions enables you to enhance the security of your accounts receivable, thus increasing your organization's borrowing capacity and significantly decreasing its borrowing costs.
Enhance Credit Department
For those companies that do not have an internal credit department, credit protection solutions can act as an outsourced credit department, enabling you to rapidly understand a prospect's credit worthiness, and guaranteeing the receivables from that given organization.