How Trade Credit Insurance Can Help Your Business Grow

Every entrepreneur aims to grow their enterprise. However, business growth requires more than an effective business model, a successful sales team, and good margins. While these elements should be present, business owners must also understand when and how to mitigate their risks. 

One valuable tool that organisations in Singapore can utilise to mitigate their risks and safeguard their financial interests is trade credit insurance. This specialised insurance functions as a safety net that protects against uncertainties and enables businesses to expand, thrive, and explore new opportunities. Let us explore how trade credit insurance can fuel the growth of your business, ensuring stability, confidence, and profitability in a competitive marketplace.

1. Obtain better financing terms

Businesses with insufficient working capital often seek a bank loan to fund their daily operations and business growth. However, without a robust credit score or collateral, bankers would not be comfortable providing the funding you require. Even if the bank is willing to offer a loan, you may incur a higher interest rate to reflect the risk the bank is taking.

Trade credit insurance can help transform your insured receivables into secured collaterals, allowing you to secure higher levels of funding at lower rates to support the deals you want to do. Subsequently, this influx of working capital can be channelled into various aspects of your enterprise, granting you financial flexibility to respond quickly to opportunities as they arise.

2. Safeguard against debtor default

Businesses that extend credit terms to their clients may run the risk of their customers defaulting on payment. With trade credit insurance offering complete coverage of the enterprise’s turnover, you need not worry about unpaid invoices disrupting cash flow and spelling disaster for your company. This financial stability allows you to focus on your core operations and expand your organisation with confidence.

3. Explore new markets

Entrepreneurs looking to grow their businesses often seek to expand into new markets and reach new customers. However, venturing into international trade markets can be a daunting prospect due to the inherent uncertainties involved. Political risks, currency fluctuations, and export restrictions are some of the challenges business owners may face when entering a new business market.

With trade credit insurance mitigating these risks, you can have the confidence to explore new markets and pursue lucrative opportunities to grow your global footprint, capitalising on the vast potential of international commerce. As a result, your business enjoys increased sales and market share.

4. Enjoy favourable credit terms and procurement discounts

Trade credit insurance can work both ways. Just as your policy can safeguard you from debtor defaults, you can leverage your insured status to make your business a more attractive customer for potential suppliers. When suppliers know your company is safeguarded by trade credit insurance, they will be more inclined to offer favourable credit terms or discounts. 

The suppliers’ willingness stems from the assurance that they will be paid promptly and in full, enhancing their trust in your financial stability. So, not only can you improve your capacity to trade with others. You can also reinvest your cost savings into your business, thus enhancing your profitability.

As you can see, trade credit insurance offers more than debt protection. It also empowers your enterprise to thrive in a competitive landscape. If you are ready to embrace the protective shield of trade credit insurance and wish to know if it is suitable for you, feel free to reach out to Acclaim Insurance Brokers. Our team can assess your business and tailor our solutions to best fit your needs. Contact us today to learn how we can help you.