Credit risk insurance protects investments from default, insolvency, and bankruptcy. Since there’s always some risk, carrying a policy would prevent anything catastrophic from happening. So, even if there were a market downturn, you wouldn’t have to worry about going broke. The policy could pay in the event of a sudden drop in income, protecting your assets. Receiving a payout from the policy would help you bridge deficits, and you’d have time to rebuild.
How Does Credit Risk Insurance Work?
When evaluating a potential applicant, insurance agencies have to examine their creditworthiness. It’s easier to set premiums once they’ve determined how likely they are to repay. Cash flow is another factor to keep in mind when applying for a new policy: the more cash the company brings in, the large the policy they can receive. So, don’t forget to give them all the company’s receipts when applying.
If your company has sold tons of products on credit, and a customer fails to pay, file a claim. A claim goes through the agency’s processing facility before it can be delivered. But, as soon as they’ve verified everything has been completed, you’ll get a check in the mail. If something is delaying the mail, it may have to wait a few days. But, it’ll arrive, protecting you from losses. That way, even if a customer hasn’t paid, it’s not affecting the company.
Trade Risk Group offers credit risk insurance to businesses in the US. Visit them at their website at https://www.traderiskgroup.com to learn more.