GMM are 'Trade Credit Insurance specialists and with our experience and strong insurer relationships we advise and work with our clients to ensure their Credit risks are protected.
'Trade Credit' simply means that a 'Vendor' extends a 'Customer' credit payment terms, typically 30 to 120 days from the date of invoice, giving the customer extra time to pay for the goods or services provided.
'Trade Credit insurance' safeguards a business against the failure of its customers to pay their trade credit debts.
Companies fail for a whole host of reasons, from not spotting a change in their environment, to management mistakes, to suffering a devastating bad debt.
"In the course of a year the average company will lose more than 3 of its active customers because of financial distress, insolvency, administration or receivership". - Source - CMRC
Most businesses don't hesitate to protect tangible assets such as buildings, machinery and stock, but fail to recognise the impact of payment default by one or more key customers can be just as devastating.
Trade debtors can be the largest asset a company holds on its balance sheet.
The Importance of Credit Insurance
Courtesy of Euler Hermes, one of GMMs insurer partners
Protection: Remove bad debts from the business equation, maintaining cash flow, profitability and protect budgets.
Customer Profiling: Establish appropriate Credit limits based on current customer financial positions.
Access to Finance: Trade Credit Insurance cover can be used as security to facilitate finance from banks.
Optional Debt Collection service: so you can carry on running your business whilst your bad debts are being chased by you insurer.
Below are the characteristics of companies that would benefit from Credit insurance:-
• Previous experience of bad debts
• Companies looking to Expand/diversify or that export.
• Companies that use funding e.g. Invoice discounting or debt factoring
• Concentration of risk with high credit exposures on several key accounts