5 Advantages of a Credit Insurance Policy

While running a business, you are likely to meet customers who are quite poor in clearing debts. Some will even disappear while owing you large amounts of money. When you are faced with such customers, credit insurance companies come to your rescue. A good example of a credit insurance company is Niche Trade Credite. Just like in any other insurance policies, credit insurance has its advantages which really help you as the business person to overcome the challenge of bad debts. The companies help you in getting back to your financial position before the bad debts were noticed. By insuring your credits with a good company like Niche Trade Credite, you are certain of getting the best insurance cover on your bad debts. Credit insurance companies make sure that you increase your sales and hence your business grows. A company like NicheTC gives you the best solutions when dealing with errant customers. It is therefore necessary that you acquit yourself with the advantages of taking a credit insurance cover.

Niche Trade Credite

Below are some of the advantages:

Increased borrowing

Most credit insurance companies make sure that you have access to working capital which is cost effective. This helps your business to grow and also to avoid major cash flow disruptions. Credit insurance companies have a goal of maximizing the availability of your working capital. This is usually from the receivables that you have pledged to your lender.

Peace of mind

Once you insure your credit losses, you are certain that there will not be any bad debts being written off. This way you relax and run your business while you are at peace. This way, you smoothly run your business.

Loss protection

Credit insurance companies protect you from catastrophic losses. It is good to note that one of the most risk prone assets is the receivables. Credit insurance companies provide a safe net when they protect you from bad debts losses. The fact that a credit insurance company reinstates you to your initial position creates a kind of protection from huge and unexpected debt losses.

Lowering of bad debts reserves

Credit insurance helps you to manage write offs with a much greater certainty. This happens when you reduce the bad reserve, then you can take up excess of the bad debts reserves into your own income. This hence improves your earnings, financial ratios and shareholder equity. It is good that you note that your bad debts are not tax deductible.

Better risk management

Credit insurance companies ensure that you have the skill of better risk management. You can issue credit while you know it is a risk you are undertaking. This can only happen with the mentality of credit insurance company’s intervention in case of bad debts loss. This enables you deal with any risk that involves bad debts losses.

On top of these advantages, some credit insurance companies will make a point of paying the indemnity and also take part in the cost incurred when attempting to claim your receivables.