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Time to consider Trade Credit Insurance

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The credit risk environment is continuing to deteriorate but did you know that we can provide an Insurance solution for you? It is called Trade credit insurance.

There are a few insurers who can offer this cover and it is certainly worth considering, particularly if you are dependent on your debtors paying up quickly to maintain cash flow. However, what happens if that debtor goes into receivership because they are unable to pay you?

It has been reported by insurers that there has been a 20% increase in the number of credit insurance claims and a 64% increase in the dollar value of claims for the past three months of 2012. The failures of Retravision Southern, Wow Electrical, Kell and Rigby along with the Hastie Group, have certainly contributed to this. With the recent failure of Darrell Leigh, it will be interesting to see what further impact there will be on claims for their Creditors who are owed money.

Many Businesses have stated that the amount of days outstanding has increased and they have been incurring bad debts in the last quarter. They believe that in the next three months, it will be even more difficult to get payments from debtors.

ASIC reports that for the year up to May, total corporate collapses have increased to 13.1% over the last year, which is 8.3% higher than during the GFC.

If you are generating at least $1,000,000 a year in turnover, then Trade credit insurance is something you should be considering.

When we see a client and review what kind of risks they have, this will include property, liability, or perhaps Marine Cargo insurance, we will also ask: ‘what about your trade receivables? Aren’t you worried about that? With premiums starting from $15,000 as a minimum for this cover, it may be a small price to pay to maintaining the cash flow of a business and leave the recovery of amounts owing to your business to your insurers.

Speak to us about this cover, CPR are the experts who will save you.

Last changed: Aug 13 2012 at 9:58 PM

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