Credit purchases are quite common in the business sector. If you run a business, you will have some customers who purchase on a credit basis. Now, imagine a scenario, wherein you extend credit to your customers and they default on their payments? Where does that put your business? If the customer goes bankrupt, then think about the financial losses?
Credit Trade Policy to the Rescue
You do not want to land yourself in the above situation. Here is where a credit trade policy can be of great help. The main objective of such a type of policy is to protect your business against any type of financial loss that occurs due to the non-payment from your customers.
This type of policy proves to be useful if you plan to go global with your business. International markets are always subjective to political risks. Countries might be going through terrorism, war or change in government regulations which in turn can lead to non-payment from your customers.
Opting for trade credit insurance eliminates such risks and allows you to extend your credit terms internationally. If you operate from Australia and are looking for a trade credit policy, then you can reach out to companies such as Niche Trade Credit situated in Sydney, Australia. They have different types of credit insurance tailored to suit your requirements.
Niche Trade Credit has been in this line of business of 30 years and is your best bet when it comes to protecting your business. The company takes pride in the delivery of high quality and feasible credit solutions to their clients.
If you are still weighing your options about trade credit policies, then you might want to know about some of its benefits:
- It can help you with better portfolio management
- It can help build your relationships with banks for lending capital
- It can help boost your sales and profits
- It can help improve your lender relationships
- You can easily get information about the creditworthiness of your customers
If you are convinced to opt for a trade credit policy, then you might need to know the premiums that need to be paid and how this policy works. The premiums for this kind of policy are often determined after taking into considerations that below factors:
- Size and nature of the business
- The complete turnover of customer transactions
- The creditworthiness of your business
- The coverage percentage that you have opted for
What Does Trade Credit Policy Not Cover?
Bear in mind that trade credit policies will not pay for the complete losses incurred in the process. It will only cover for a certain percentage of the debts. Your trade credit policy will not cover:
- If you have forgotten to mention important details in your claim
- If there is any type of disputes between your business and the buyer
- If your business is involved in fraudulent acts
- If there is a breach of contract
When you opt for trade credit policy, ensure that you read the fine print that comes with it. Such types of policies can ease your mind and help you concentrate on improving your profit.