How Trade Credit Insurance Can Help in Expanding Customer Base and Charting Business Growth in Dubai and Across the Globe

Being an entrepreneur, it is justifiable if you wish that your business should perform to its optimum strength and potential because by doing so, chances of your success increase manifold. But unfortunately, when you deal with a number of buyers, there may be a few buyers who may not fulfill their payment obligations due to various reasons. Though not all of them may intentionally default on payments, they may face issues due to political situations. This may be particularly common in export trades.

Likewise, there may be other types of commercial risks also that may force buyers to default on their payments. Similarly, some of the buyers may become insolvent and so, this may also result in non-receipt of amounts due from them. Whatever may be the case, the fact is such things may create a crisis for your business and this is what dictates the need for finding a remedy for it.

The most effective way to counter the risks of losses that may arise due to non-receipt of payments is to buy a suitable Trade Credit Insurance policy. In fact, you will be doing a great favor to your business by buying this policy because it can protect you from the financial losses that may directly result due to non-receipt of payments from buyers who become insolvent or who are forced to default due to circumstances like political or commercial risks.

This policy will protect you regardless of whether you do export trade or whether your business completely involves only domestic trade. Similarly, the policy will protect your transactions irrespective of whether they are short-term transactions or medium-term trade transactions.

In short, by buying an appropriate Trade Credit Insurance policy and ridding your business of risks of losses due to non-receipt of payments, you can take complete charge of the performance of your business. This means you will have the liberty to chart the course of the growth of your business.

If you buy the right Trade Credit Insurance policy, you can be confident of having covers for the following main risks:

  1. Insolvency of buyers
  2. Continuous defaults in payments by some buyers – If an account is not cleared after a specific period of time, it is tantamount to protracted default by the particular buyer and the policy covers this risk as well.
  3. In certain specific cases, the policy covers the expenses incurred for collecting the debts also.
  4. Political risks in the case of export trades.

The main advantages of buying a Trade Credit insurance policy

  1. Credit risks are a common ingredient of any business. The policy mitigates all the credit risks.
  2. Since the provision you are supposed to create for your bad debts will come down, your balance sheet will genuinely become attractive to the shareholders and stakeholders. Of course, the profitability of your business will also improve to a significant extent.
  3. When buyers get confidence that your credit terms are favorable to them, they may buy bigger quantities from you. Your customer base will also expand, thus increasing the market share of your business.
  4. When your balance sheet shows an increased value of accounts receivable, you may have more access to finances. You may get finances at better rates as well.
  5. Most importantly, an appropriate Trade Credit Insurance policy will effectively compliment the systems and procedures you have put in place for credit management.

How can we, AFIA Insurance, help you?

  1. We have proven expertise in the insurance field and our conspicuousness in this sector is eloquent testimony to our competence. Time and again, we have proved that we can help our clients in choosing the right policies that are offered by the right insurers. We also ensure that our clients are not forced to shell out unreasonable amounts for buying the policies that suit their unique requirements.
  2. We always think that clients are our bosses and so, we relegate all other aspects to the back. We explore all the options available including the insurance companies that offer various types of policies, negotiate with the right companies and get our clients the most appropriate policy that perfectly fulfills their requirements.
  3. We have enormous experience in organizing domestic as well as international credit insurance plans so as to cater to businesses operating in various sectors including those that do export trades with other countries.
  4. Thanks to the excellent rapport we have developed with credit insurers, we can effectively convey all the needs of our clients to them.
  5. We have vast experience in handling claims and we assure our clients that we will do all the follow-ups till the claims are settled to their satisfaction.
  6. We offer guidance and advice pertaining to debt collections also to our clients.
  7. Businesses that opt to utilize our services will certainly get the best credit limits from the right credit insurance companies.
  8. For clients who have already bought credit insurance plans, we offer free audit services for assessing their existing insurance plans. We advise them suitably to make improvements, if necessary, to their insurance basket.

About Author

Rachel Al Mughairi

About Author

With over 34 years in the international insurance industry in a variety of senior management roles, and as holder of the Diploma in Insurance from the Chartered Insurance Institute, Rachel surely knows her insurance! With experience in London, continental Europe and the Middle East, Rachel is here to share her knowledge and help you understand more about insurance products in this easy-to-understand series of videos and blogs.