Nearly 1 in 5 businesses goes out of business yearly due to the impact of delinquent accounts. This is the reason why Trade Credit Insurance is such a critical component of your risk management strategies. By insuring some or all of your trading partners’ payments, you guarantee that you will receive that money, whether it’s from your customer or your insurance company. This predictable cash flow can allow you to better plan the growth of your business.
What is Trade Credit Insurance?
Trade Credit Insurance is a form of insurance for businesses that helps protect your capital and stabilize cash flow. Trade Credit Insurance will protect you against the risk of non-payment due to customer insolvency, protracted payment, and even acts of war that prevent contract performance. It can also help secure better financing terms from banks, confident that companies protected by trade credit insurance are a more secure risk. Trade Credit Insurance is a crucial component of any business’s healthy financial structure.
Why Food Companies Need Trade Credit Insurance
The primary purpose of Trade Credit Insurance is to protect a company from the negative financial consequences of non-paying customers. If a customer defaults on payment, Trade Credit Insurance can cover the resulting losses up to a specific limit.
Additionally, Trade Credit Insurance allows you to extend credit to new customers to grow your business without worrying about non-payment. Having Trade Credit Insurance can also have a positive impact on your lenders, as they demand financial security. Trade Credit Insurance signals to lenders that your business is protected from the risk of non-payment, thus encouraging investment in your business.
Benefits of Trade Credit Insurance:
- Predictable Cash Flow
- New Market Opportunities
- Reduce Bad Debt Exposure
- Access to Increased Capital
Trade credit insurance can be very beneficial for many types of businesses. Still, it may be especially valuable for businesses with international customers and businesses operating in the import/export industry. For food companies, the protection offered by Trade Credit Insurance coverage is especially important.
Trade Credit Insurance is one of several commercial insurance policies crucial for the food industry. Coughlin Insurance has been an expert provider of insurance to the food industry for over thirty years. Ask them to customize a plan to specifically fit your needs.
Need business insurance? We’ve got you covered!
At Coughlin Insurance Services, we believe our customers should be valued and taken care of. We aim to provide quality service and meet the needs of our clients by providing businesses, including those in the food industry, with the insurance they need to protect their assets. If you’re a business looking for insurance, don’t hesitate to reach out for a free insurance quote today!