Is Your Biggest Asset Insured? The Risk Around Liquidation and Debtors
19 June 2023
As the economy continues to struggle and forecasts show significant fluctuation, there are many risks that businesses face. Many of these are naturally things that the board, or managing body are aware of and covered for, but this isn’t always the case when it comes to debtors.
Very often the biggest asset on a company’s balance sheet, debtors and their potential to default can often be the only risk a business isn’t insured against, so why is this risk mitigation not more commonly explored?
Simeon Chapman, Director at Hazelton Mountford, says: “A lot of turnover is needed to make up for a loss, even to standstill. Credit insurance is a great option to mitigate against it”.
We know that assets include all work done by business, so being owed money is a natural part of this process, but this needs to be done without threatening the overall health of a company. This is why Credit Insurance is a valuable tool that is missing from so many businesses, the cost of omission being often far greater than outlay. By transferring the risk away from your business and over to an insurer, a credit insurance policy is your protection against a customer being insolvent or failing to pay what they owe.
With multiple types of credit insurance available, your business needs will guide the option that best suits you, including:
- Whole Turnover Credit Insurance,
- Major Buyer Policy,
- Single Risk Cover and
- Export Trade Credit Insurance.
Triggered at the point of insolvency from your clients or customers, this form of financial security also covers defaults although the point at which that comes into effect would be at the discretion of the business. By ensuring your business is covered under a credit insurance policy, you are also helping to mitigate risks associated with business growth.
We’re here to help
Whatever sort of business you might have, it is likely that you would benefit from a conversation around Credit Insurance. Since one size does not fit all here, speaking to a professional broker is vital to making sure that you receive the best advice and policy for your needs. We understand your business and will therefore knowledgeably put together an insurance policy that is specifically designed for you.
Contact us today to learn more about how credit insurance might be the missing piece of your business’ protection.
As seen online and in print (on page 41 in July/August 2023) of the Herefordshire & Worcestershire Chamber of Commerce’s Business Direction Magazine.