Here’s how it works:
When you sell goods or services on credit to your customers, you take on the risk that they may not be able to pay you back. This can lead to cash flow problems for your business, which can be especially problematic if you are a small business or if you have a large number of customers who owe you money.
Credit insurance can help mitigate this risk by providing coverage for your accounts receivable. If a customer fails to pay you, your credit insurance policy will reimburse you for a percentage of the amount owed, typically up to 90%. This can help you maintain your cash flow and minimize the financial impact of non-payment.
In addition to protecting against non-payment, credit insurance can also provide other benefits such as:
- Improved credit management: Credit insurance companies typically offer credit monitoring services that can help you evaluate the creditworthiness of potential customers and reduce the risk of non-payment.
- Access to financing: Having credit insurance coverage can make it easier for you to obtain financing from banks or other lenders, since it reduces the risk of default on your accounts receivable.
Overall, credit insurance can help you manage the risks associated with selling goods or services on credit, and provide you with greater financial security and peace of mind.