Businesses Turning To Trade Credit Insurance Amid Economic Uncertainties

There is no gainsaying to the fact that COVID-19 has taken the world economy to the dogs. According to the estimation of the World Bank, the global economy shrank by 4.3 % in the year 2020. This abysmal figure is matched only by the great depression and the world wars. Every country in the western world has seen late payments on a rise.

Even though the pandemic is not over yet, the conditions have started to abate and recovery is not so distant future. If you still do not have credit insurance, it is high time you get on by Niche trade credits. They have experience of 30+ years in the business and they are in the best position to offer you the best and most befitting insurance.

The testimonies from their past customers are a testament to their exceptional service. You can easily protect the cash flow of your business against any credit or payment default. Today, there is a spike in business failure and the major reasons for this phenomenon are the poorly managed cash flow and trade receivables.

Increase in the late payments 

In Western Europe, during the months of the pandemic, the number of overdue invoices has reached a staggering figure of 47%. Countries such as France and Italy have borne the maximum brunt of the pandemic in their economy. Even those countries that did not take an initial hit are at an all-time low.

In Western Europe, outstanding invoices are a concern of more than 38% of businesses. Even prosperous countries like the Netherlands have reported that 20% of their businesses will face problems in collecting their outstanding invoices in the year 2021. The reason for invoice delays is the B2B customer liquidity constraints.

This delay in the payments has initiated a chain of consequences that has rippling effects internationally on the global supply chain.

Credit management tools being the saviour 

The survey results reflect that there is an increased commitment to the holistic tighter credit management scheme. In the face of insolvencies and bankruptcies, a plethora of businesses has opined that the credit management tools helped in protecting their account receivables. About three in five businesses are reported to use credit insurance during the pandemic.

The trade-credit insurances are a great tool to help the businesses in safe trading and generate more profit. All this comes with a much-abated risk factor of a payment default. Some businesses had, in the west European region, started to protect the account receivables by self-insurance because of the risk posed by the recession.

A great many of those businesses are documented to setting aside some funds to ensure future losses. This pattern fosters the idea that businesses have learnt the value of insuring assets in times of economic exigencies.

Conclusion

Since the economic situation is always in flux, it is always best to acquire some credit management scheme to save yourself and your business from bad fate.

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