Trade Credit top five myths

Trade Credit Insurance (TCI) is a vital safety net for businesses, yet misconceptions often deter companies from securing this protection. We debunk 5 common myths surrounding Trade Credit Insurance to highlight its true benefits.

Myth 1: "I’ve never had a bad debt. I don’t need credit insurance."

The belief that past success guarantees future stability is risky, especially in today's volatile market. Just because your business has never faced a bad debt doesn’t mean it never will. Economic conditions can shift rapidly, and an unexpected bad debt could have severe consequences, potentially threatening the financial health of your business. TCI acts as a safeguard, offering peace of mind in uncertain times.

Myth 2: "It’s too expensive."

Many businesses avoid TCI due to a perception of high costs. However, Trade Credit Insurance is often more affordable than expected, particularly when arranged through a specialist broker. These experts can tailor coverage to your needs, helping you get better terms. In uncertain economic periods, investing in TCI can be far less costly than dealing with the aftermath of unpaid invoices.

Myth 3: "All my customers are reliable. I know them well."

Trusting your customers is important, but even the most dependable companies are not immune to market pressures. Sudden economic downturns or unforeseen financial difficulties can affect any business, no matter its track record. High-profile collapses serve as reminders that no company is fully shielded from risk. TCI mitigates the fallout if even a trusted customer fails to pay.

Myth 4: "You have to insure everything."

Contrary to popular belief, you don’t have to cover your entire business with TCI. Policies are flexible, allowing you to focus on specific areas where you feel most vulnerable. While full coverage offers maximum protection, a selective approach can still provide substantial risk management, tailored to your needs.

Myth 5: "It creates an admin burden."

Some fear that TCI involves extensive paperwork and administrative effort. In reality, while you might need to provide initial details to customise your policy, a good broker will handle the complexities for you. Once set up, Trade Credit Insurance should not significantly increase your administrative workload.

The Bottom Line

Despite the risks of non-payment, many companies still overlook the advantages of Trade Credit Insurance. For businesses looking to safeguard cash flow and avoid the potentially devastating impact of bad debts, TCI is an essential form of protection. It’s time to separate fact from fiction and consider how Trade Credit Insurance can benefit your business.

For more information, reach out to our Trade Credit specialists who can guide you through the options and find coverage to suit your needs.