Can you predict the future?
• “We’ve never had a bad debt and don’t expect to…”
• “We have great relationships with our clients; they pay their debts…”
• “We have strict collection procedures in place…”
We often hear the above comments and then, following the insolvency of a customer, have the business approach us for Trade Credit Insurance to prevent against similar future losses.
A client of IMC Trade Credit Solutions, in business for 25 years and never having had a bad debt, suffered a $1 million loss as a result of a client not paying for stock on location at various points around Australia.
The claim was paid in full, managed by IMC, and the lost cash-flow was replaced. As an added benefit, through a strong retention of title clause the client was able to recover much of the stock covered by the claim and thereby reduce their overall loss substantially.
The client really saw the value of Trade Credit Insurance.
With ongoing economic volatility here and overseas and the collapse of a number of high-profile businesses last year, Darrell Lea, Rosella Foods, Retravision Southern, Kell & Rigby, St Hilliers, Hastie Group etc., the incidence of bad debts in Australia remains on the rise. January has already seen some more large household names fail.
Trade credit insurance can help businesses mitigate the risks for businesses should their customers fail and leave a trail of unpaid debts.
In the vast majority of cases insolvency is the trigger for a claim. The remaining small percentage is usually triggered by “protracted default”, the continual non-payment of debts for reasons other than formal declared insolvency.
Any business offering customers credit terms, whether within Australia or exporting to overseas markets, can benefit from Trade Credit Insurance.
Trade credit insurance can mean the difference between a business failing as the result of non-payment by a key customer and remaining a viable going concern.
Contact IMC Trade Credit Solutions for more information.
www.imcnewbury.com.au
