In recent months, some trade credit insurers are recording an increase in the number of claims received as a result of bad customers debts.
According to Trade Credit Insurance Broker NCI, the current economic slowdown brought about largely from persistent interest rate hikes and the surge in inflation is having a major effect on business insolvencies, and therefore associated insurance claims.
In 2023 many businesses are feeling the pressures from rising costs and ongoing supply chain bottlenecks, and businesses that were previously performing well may now be finding themselves unable to pay back their debts.
What can businesses do to protect themselves?
Whilst having trade credit insurance is the best protection your business can have against bad debts, simply monitoring your debtors for warning signs could be an added way to avoid a potential bad debt.
Some common customer warning signs include:
• A sudden change in regular payment patterns – this can indicate a cash flow problem
• A reduction in order volumes – a business in financial trouble will likely be cutting costs
• Late payments and excuses
• Admission of cashflow problems
• Ignoring your emails and phone calls
• High employee turnover or staff layoffs
At Centrewest, we are all about reducing our clients risks through risk management. One way of identifying (and reducing) any areas of risk to your trade credit is to conduct a credit health check.
Centrewest work with specialist Trade Credit Insurance Broker NCI, who offer FREE trade credit insurance health checks for Centerwest clients with trade credit insurance policies. This can include assessments of your major clients, highlighting areas of your business most at risk or providing tips to onboard new clients and keep track of existing exposures. Contact your Centrewest broker today to find out more.