At 6 foot 7, Peter Jones not only towers over most people but towers over the business world with his estimated net worth of £500 million. By the time he was 22 he was living the dream. He had his own home with a BMW and Porsche parked in the driveway. The self-confessed car fanatic was also married to his first wife Caroline. However he has not got to where he is today without some failures. Jones set up a computer business manufacturing PCs under his own name, but the recession of the early 1990s saw the business go under.
"The reason I lost the business was naivety,” he has said since, “I had an opportunity to take out credit insurance, but didn't. Companies I was supplying started to go bust, then I got hit. It was like a snowball."
It would seem he learnt his lesson the hard way but he got back on his feet and used the failure to mature as a businessman. We assume from past comments that his B2B companies will have credit insurance policies in place today.
Credit insurance is the protection against bad debt for businesses. In its simplest definition a credit insurance policy will pay out a claim if your client fails to pay you. There are many benefits a credit insurance policy has to offer:
- Greater insight into new and current clients’ financial situations so you can make informed decisions on whether to offer credit terms.
- Credit Insurance policies pay out up to 90% of what is owed to you if a client fails to pay.
- The credit insurance policy becomes part of your credit control process, which in turn improves it.
- Confidence to enter new markets and drive more sales.
- Competitive edge as you can offer credit terms to new clients knowing you are protected.
Do I need Credit Insurance?
To put it bluntly, yes. If you deal with your clients on credit terms you should have a credit insurance policy to protect yourself from bad debts. It is quite often the unexpected debt that turns a profit making year into a loss making one. Even so called “blue chip” companies fail, so these will need protecting too. When “blue chip” companies fail they can also bring down their suppliers too, as smaller companies often use larger companies as their main source of regular income. If this is snatched away they will struggle. Credit insurance will pay you what is owed to your business, giving you the valuable time needed to find replacement business.
The CMR difference
We at CMR offer a unique managed credit insurance policy providing you with the greatest support. This entails CMR processing applications, monitoring/recovering debts and processing claims, giving you the time to concentrate on running your business so it can be as great as it can possibly be. To find out the cost of a credit insurance policy and to get indications as to whether your top 5 clients are insurable, just fill in our Quick Quote.