Secure Your Accounts Receivables From Slow Pay, No Pay or Bankruptcy
Imagine you’re a manufacturer or service provider and a prospect wants to purchase $50,000 worth of your product or service. This is a fantastic opportunity for your business, but it raises several questions. Should you ask for a deposit? Is it wise to sell to this customer? What risks could it pose to your company? Will they follow through with payment? If they don’t, what options do you have? Can you manage the financial implications of this deal? The sales team is urging you to finalize the transaction, but are you prepared for it? Could your cash flow be at risk? Of course, you will run it through your credit team; however, is there a guarantee that they have evaluated the risk properly?
This scenario is a common hurdle for many businesses. Understanding your available options is where we come in. If you’re looking to boost sales without taking on additional risk, improve your borrowing conditions, or secure the cash flow you need while safeguarding your business against payment defaults, credit insurance can be the solution for you.
Recognize Credit Risks More Effectively
If you could be completely confident in assessing your credit risk, how would that influence your company’s growth strategy?
Our network of risk experts and comprehensive business information database provide strong local insights and unmatched credit data on your potential customers.
- Shield you against non-payments
- Protect your biggest asset: your accounts receivables
- Prevent losses during a bankruptcy
- Trade with confidence
- Remove the need for bad debt reserves
How we can help your business:
Boost Sales With Zero Risk
Credit insurance is a unique financial tool that can provide a return on investment. By insuring your receivables, you can confidently increase sales to your current customers, pursue new clients who may have previously seemed like credit risks, and explore markets that you once thought were too risky. With credit insurance, you can make quick credit decisions, bypass the lengthy credit application process, and avoid the uncomfortable “personal guarantee” that many customers are reluctant to provide. This reduces the friction between ambitious sales teams and cautious credit departments, enabling you to sell more aggressively without the associated risks. You’ll have peace of mind knowing that you can collect on the goods and services you provide.
Here are some benefits of credit insurance for business owners:
- Alleviate conflicts between sales and credit departments
- Accelerate the sales process and eliminate the need for personal guarantees
- Leverage credit insurance to gain a competitive edge
- Provide existing customers with increased credit limits
Limit Coverage to Specific Risks
Frequently, our clients secure significant deals that push them beyond their usual comfort levels. While they are generally at ease selling to their existing customers, these larger orders can be daunting. They may find themselves needing to borrow funds to fulfill the order, but banks often hesitate due to concentration risks, or they simply feel uneasy about extending such a high amount of credit to a single buyer. Additionally, these sizable orders frequently request longer payment terms, like 60 or 90 days, which can severely impact cash flow and lead to sleepless nights. In these situations, credit insurance can be a valuable solution. You aren’t required to insure your entire portfolio; KLW Group can customize a strategy with various carriers to support transactions of this nature.
Improve Your Borrowing
Traditional asset-based lenders typically advance 75-80% of receivables. However, they often exclude international accounts receivable and may disregard certain receivables due to concentration risks. This restriction can create challenges for businesses looking to fully utilize a line of credit. With credit insurance, banks may lend up to 90%, frequently at lower rates since the risk is shifted away from the bank. Additionally, banks are more willing to lend on international receivables and mitigate concentration risks. Credit insurance is also an excellent alternative to letters of credit, as it is generally more affordable and less complicated. While a letter of credit can incur costs of up to 2% and potentially restrict your customer’s bank line, credit insurance usually costs around 0.25 bps, enabling you to offer open terms internationally with the assurance of guaranteed payment. Furthermore, credit insurance can reduce or eliminate your bad debt reserve, allowing you to transform it into a tax-deductible insurance provision. It also aids in forecasting potential losses, which are outlined in your policy. In times of uncertainty, having credit insurance provides peace of mind.
Want to improve your borrowing options?
Contact us today for a formal quote tailored to your business!
