Cash flow issues can be triggered by many causes...but Credit Insurance could save the day
Volkswagen's first quarter profits fell following the emissions scandal, a scandal that very few, if any, anticipated. According to the BBC, their profits have dropped by 20% in the first quarter showing this malpractice has affected them. As Volkswagen's turnover is so large, they should be able to absorb this drop in profits but it does show that the unexpected can have an adverse effect on any company's profitability, which in turn could affect their cash flow.
An extreme example
Imagine you supply your client in the UK with goods that they in turn export and you extend them 60 days credit, however an event occurs which prevents the end buyer from paying your client. They are going to struggle to pay for the goods they bought from you. The strain on your client's finances could ultimately become a strain on your finances.
A likely example
Other issues that could affect your client's cash flow could be issues with their customer's cash flow. Perhaps their customer cannot pay causing strain on your client and therefore coming back to hurt your company. This is where credit insurance could help protect you from outside factors that you cannot control.
What is credit insurance? A solution
Credit insurers protect against the risk of your clients not paying invoices if they simply default or they call the administrators in. A credit insurance policy also protects you against political issues such as war, as a company based in a war torn country could struggle to pay. Credit insurance therefore takes the risk out of the factors you cannot control, thus giving you the confidence to continue to trade knowing your credit insurance policy will pay out a claim if anything goes wrong.
Export credit insurance and domestic credit insurance can be combined to protect your entire turnover from large losses that could damage your growth. Please get in contact with our friendly and experienced credit insurance team on 020 8835 2587 or request a QuickQuote for your new credit insurance policy.