So you have a business and you sell to clients on credit terms. Maybe you should consider credit insurance policies on your receivables. Why?
The simple answer is to reduce risk, and strengthen your businesses financially in order to establish a stronger bankline in the future.
However the deeper answer has to do with your business and its potential loss. The saddest stories in the factoring world come from businesses who lose their largest accounts overnight.
These accounts can be large fortune 500 companies with sound financials.However one bad press release or shock to the economy can have a trickle effect and bring their business to a halt. A perfect example of one of these unforeseen chain reactions, was the filing of bankruptcy of one of the largest food processing companies in the industry.
All it took was one massive press release about the “pink slime” found in processed hamburger meat and The King of Prussia, a PA-based food processor was devastated. Prior to the release the company processed about 500 million pounds of beef annually!
Now imagine if you are a suppler for this company with over $50,000 or $100,000+ in outstanding A/R. Prior to the pink slime press release you may have not been worried. The King of Prussia may have been one of your largest and secure accounts. However you now can see how quickly things can change in today business environment.
why should you buy credit insurance?
Had suppliers had credit insurance policies for their large customer “the king of Prussia” they would have recovered $0.80 to $0.90 cents for every dollar they were owed.
Sometimes – and this is the reason for credit insurance – there are unforeseen factors that influence the performance and survival of your customers. Whether those are the court of public opinion, mismanagement, or a bad acquisition, companies go bankrupt, leaving you and your company paddling up shits creek.
Visit Neebo Capital for Credit Insurance Policies on Receivables