Cash Flow Protection
Cash flow is the lifeline of any business. From paying employees, to selling products, to general and administrative expenses, and all funded from the cash flow generated by buyers who pay invoices in a timely manner.
But what happens when your buyer can’t pay?
A customer non-payment event can have a significant impact on the long term viability of the business. In the short-term, it affects profitability and has the potential to reduce the equity in the business earned over a number of years. A loss could also violate current banking covenants, causing bank compliance issues. In a worst-case scenario, a company might have to reduce its workforce, or even close its doors.
Common non-payment indicators include: Payment is promised, but never received. Or, the debtor has been called numerous times but are now unreachable. A buyer may possibly have every intention of paying but cannot because they haven’t been paid, or worse they may have lost one of their customers. Fraud can be the reason for non-payment. The business owner or a financial executive withdraw funds from
the business for personal purposes. Often non-payment by export buyers is a result of currency fluctuations, global macro issues, or because the exporter has less transparency in the creditworthiness of the buyer. Unfortunately, all these events, and many more, occur after credit has been already extended and now the seller is trying to collect past due receivables.
Trade credit insurance, or credit insurance, safeguard cash flow because it protects from buyer non-payment due to protracted default (slow-pay) or formal insolvency. A trade credit insurance program underwrites the credit-worthiness of your buyers so the insured can trade with them safely knowing they’ll be paid.
900 West Valley Road, Suite 701 | Wayne, PA 19087
Tel. 484-595-0100 Fax. 484-582-0111
P.O. Box 3665, Tyger Valley, Cape Town 7536 South Africa