How to Protect Your Business From Unfair Contracts

There are laws in place in Australia to protect small businesses from unfair contract terms. The result of these laws are that small businesses are better protected, and there are now genuine consequences for any business that seeks to use unfair terms to gain the upper hand.

The Australian Competition and Consumer Commission (ACCC) has been heavily investigating unfair contract terms and widely recognised businesses, such as Uber, Ashley & Martin and Lendlease, have all been affected.

In the following article we will look at the types of contracts that are protected by this legislation.

Which Types Of Contracts Are Affected By The Legislation?

The latest unfair contract terms legislation is relevant to both ‘small business contracts’ and ‘standard form contracts’. Below we have prepared some bullet points to help you determine whether a contract is either of these types.

Small business contracts must meet the following criteria:

  • the contract is for the supply of goods or services, or the sale of land; and
  • at least one of the parties is a small business (being a business that employs fewer than 20 people, including regular casual employees); and
  • the upfront price payable under the contract does not exceed either:
    – $300,000; OR
    – if the contract has a duration of more than 12 months, $1,000,000.

Standard form contracts are defined by a disparity in negotiating power. One party offers the other party a ‘take it or leave it’ deal. Examples of this type of contract include membership contracts and vehicle rental agreements. Courts determine whether a contract is ‘standard form’ in the following ways:

  • if one of the parties has all or most of the bargaining power;
  • if the contract was prepared by one party before any discussion regarding the contract had taken place between the parties;
  • if the terms of the contract are generalised or take into account the specific characteristics of the parties.

In order for the new legislation to be applied, a contract must be both a small business contract and a standard form contract.

A hypothetical example might be if a 12 month contract was prepared by a larger company demanding a small business pay $1 million by the end of the contract. If this is unreasonable, a small business might be able to argue that the contract terms were inherently unfair.

What terms are considered ‘unfair’ in a contract?

If you are a business that likes to offer ‘tough love’ contracts you may wish to review your contracts to make sure there are no grounds for the ACCC to charge you for unfair contract terms. Some terms that may be considered unfair might be charging customers for services without providing those services, or increasing the price of services without informing the client.

Furthermore, if you feel that you are being victimised by an unfair contract based on the above, it is important to seek further advice.

Disclaimer

Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.

The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.

Does Your Small Business Need Public Liability Insurance?

There are several types of insurance on the market that can help protect your business, one of the most essential is Public Liability Insurance.

Public Liability Insurance protects your business financially from any claims that arise in relation to damage or injuries sustained by third parties and/ or their property during the course of your usual business activities.

Why Is Public Liability Insurance Important?

Public liability insurance protects your business against negligence. If a customer or other third party claims that you or someone in your business has behaved negligently and it has resulted in injury or property damage, public liability insurance can help cover the costs incurred.

Although you would never intend to damage someone’s property, or be involved in a situation that leads to injury, this does not mean you will not be found negligent by a court if any of these scenarios were to occur. Negligence implies not taking proper action in regards to a reasonable foreseeable event; it is nothing to do with intention.

What Does Public Liability Insurance Cover You For?

Public liability insurance protects you financially from any claims made against you, as well covering any compensations costs for which you may be deemed liable.

The majority of public liability policies are able to provide the following coverage:

  • Loss or damage of goods
  • Legal costs
  • Damage or injury caused by your products and services

Some policies may be more extensive than others, by offering additional cover for items such as accidental pollution or first aid expenses.

Although a public liability policy can cover you for a wide variety of scenarios, there are some cases where it will not protect you financially.  The specific circumstances that are not covered will depend on the policy that you choose.  Many public liability policies also have caps on how much they can pay out. There is typically a limit per claim, and on the policy as a whole.  Your broker can discuss these policy exclusions with you.

Does My Business Need Public Liability Insurance?

Most businesses will find public liability insurance relevant to them. However, there are some industries that carry significantly higher risks, where Public Liability Insurance is particularly important. If your business involves any of the following, you should consider Public Liability Insurance:

  • Manufacturing or repairs
  • Working in or visiting areas not owned by your business
  • Regular visitors to your work premises
  • Direct interactions with customers

If you are not sure whether your business requires public liability insurance cover, we recommend that you talk to a broker or insurance professional today about your business and business insurances.

The amount of cover you will need depends on the specifics of your business, but in general, you should get as much as you can afford. Your insurance advisor can help you compare rates and policies from different insurers to find the most appropriate cover for you.  Contact us for more information.

Disclaimer

Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.

The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.

Would Your Business Survive the Loss of a Key Person?

Would your business survive if a ‘key person’ such as an owner, founder, or essential employee passed away? This is a very difficult, but extremely important question to ask.

Businesses are faced with a range of challenges when they lose an integral member of the team who they depend on.  Losing a key person can result in the loss of in-depth knowledge and a valuable skillset, productivity, strategic initiatives and revenue as well as the relationships they have built with valuable customers.

If losing a key employee would affect your ability to continue business operations, Key Person Insurance may be relevant for you.

What is Key Person Insurance?

Key Person Insurance is life insurance on the key person (or persons) in a business. It is only relevant for people who are crucial to the business that the company absolutely cannot operate without. These people can be insured with this form of life insurance, where the company receives an insurance payout if that person dies unexpectedly.

This cover is so important because, in small companies in particular, the death of a key person can mean the death of the entire company.  Key person insurance can help the company survive.  With a financial payout, the company is in a much better position to continue as the insurance proceeds can cover expenses until a replacement person is found.  Alternatively, if the company cannot continue, the funds can help pay off businesss debts, distribute money to investors and pay severance to employees so that it can shut down in an orderly manner, rather than having to declare bankruptcy.

Does Your Business Need Key Person Insurance?

If you are the only employee in your business, generally speaking, you will not need Key Person Insurance, and should consider other forms of life insurance to protect your assets.

If you are an SME with employees, Key Person Insurance may be necessary for you, particularly if there are people within the business whose absence would result in operations grinding to a halt.  In order to determine who in your business may need the insurance, look at your team and think about who is irreplaceable.  In most small businesses, this will be the owner or an employee who holds the company together by assuming responsibilities for keeping the books, managing the employees, handling the key customers etc.

The amount of cover you will need depends on the specifics of your business, but in general, you should get as much as you can afford. Your insurance advisor can help you compare rates and policies from different insurers to find the most appropriate cover for you.  Contact us for more information.

Disclaimer

Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.

The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.

Insurance Fraud Costs Australians $2.2Billion Annually

According to the Insurance Fraud Bureau Australia 2018, insurance fraud is estimated to cost the economy up to $2.2 billion every year.  Fraudulent insurance claims ultimately cost everybody who takes out insurance, directly impacting premiums for honest policyholders.

While some instances of insurance fraud are deliberate, in many cases insurance fraud is committed without the person even realising.  While it may seem that these costs will only impact the insurance company that has to pay out, the consequences of insurance fraud are far more widespread.  When the insurance company has to pay out, costs are transferred to policyholders in the form of higher premiums, higher excesses, or more policy exclusions.

As such, it is important to take all the steps you can to ensure your insurance is up to date and you’re not inadvertently committing fraud.

What Types of Insurance Fraud are There?

Deliberate: Deliberate fraud is a calculated act that has been planned in an attempt to deceive the insurer.  For example, if policyholder deliberately sets fire to their own property, or fakes a theft in order to receive a payout from the insurer.

Exaggeration: In this case, the policyholder does have a legitimate claim, however they deliberately exaggerate the amount of damage caused or the costs of the loss in order to get a higher payout.

Non-Disclosure: Non-disclosure means that the policyholder has not given full and complete information to the insurer, which may affect their decision to insure or pay out a claim. This can be deliberate or accidental. For example, if you are insuring a company vehicle, you may neglect to mention, or be unaware of the driver’s previous convictions.

How to Avoid Committing Insurance Fraud

Insurance companies across Australia and New Zealand are dedicating significant resources to combatting insurance fraud.  Many insurers are using new technology and software to identify insurance fraud, along with providing specialist claims training to identify fraud and engaging with specialist investigators.  Furthermore, the Insurance Fraud Bureau of Australia is working closely with insurance companies to provide them with information relating to possible insurance fraud to aid any investigations.

If you are deliberately committing insurance fraud, it’s important to be aware of the risks that this involves, and the fact that you are likely to be caught out sooner or later.  In order to avoid accidentally committing insurance fraud, here are a few things you can do:

  • Be Honest: Always give accurate figures and report facts. Don’t inflate the value of something or exaggerate the extent of damage.
  • Give Full Information: Particularly in the event of a claim, it’s vital to make sure you tell your broker or insurer anything that you think may potentiallybe relevant.
  • Read your PDS: Your PDS outlines the things that can make your insurance void. By knowing what these things are, you can make sure you avoid doing them.
  • Read Your Duty of Disclosure: Your insurance broker will provide you with a Duty of Disclosure that will outline key information that should always be disclosed to your insurer.

Navigating your business insurance can be confusing. Speak with your insurance adviser if you have any queries about your policy and the details you have provided to your insurer.

Disclaimer

Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.

The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.

4 Year Old SMEs Most At Risk of Failure

Newly released data from Equifax has stated that SMEs in their 4th year of operation are at highest risk of business failure.

Equifax is an information solutions company and provider of credit information and analysis in Australia and New Zealand.  The company’s analysis of External Administration events in Australia in 2017 revealed that this is the most problematic time for Australian SMEs as they typically move into a growth phase at the four-year mark.

Justin Eley, Senior Product Manager, Commercial Risk at Equifax, stated that when businesses start growing, the volume and type of credit enquiries increase, and its risk of default or other adverse events rises in parallel.

“Pushing for growth or expansion in any business is a calculated risk, a large part of which is financial” – Justin Eley

Insurance For Your Growing Business

As your business grows, it is exposed to more risk. In order to ensure the continuing success of your business, you should consider your risk portfolio and identify ways to reduce the risks that your business is exposed to.

Having appropriate insurance in place is one of the most effective ways to manage your risk and ensure the continued success of your business.  As your business grows, it’s important to regularly review and update your insurance program, because:

  • The policies which previously covered your business may not be appropriate anymore
  • You shouldn’t wait for an annual review, but rather speak to your insurance broker as your business changes in order to ensure your assets are always appropriately covered

Having insufficient cover can lead to the accumulation of high costs in the event of a claim, which can be enough to put some companies out of business.  Insurance can be complicated and every business has different insurance needs, which continue to evolve with the business.  As such, it’s important to have an ongoing relationship with your insurance advisor, who can help protect your business now and into the future.

Don’t hesitate to contact us for more information or advice on your business insurance or risk management strategies.

Disclaimer

Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.

The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.

Faulty Workmanship

Is Your Business Covered for Faulty Workmanship?

Insurance policies are full of terms and jargon that can be difficult for business owners to understand and apply to their own real-life situation.  These terms can often be vital parts of policies that determine whether you are covered in the event of a claim or not.‘Faulty Workmanship’ is one of these terms.  Tradesmen across Australia are often left wondering whether they are covered for Faulty Workmanship under their Public Liability policy.

It’s important to note that claims for public liability, especially those involving faulty workmanship, are all judged on the specific circumstances and will be reviewed by the insurer on a case-by-case basis. While we cannot tell you which specific claims would be covered and which wouldn’t, below is a guide to the fundamentals of Faulty Workmanship and Tradesman Insurance.

What is Faulty Workmanship?

While tradesmen take every precaution to complete each job to a high standard, mistakes are a reality of life.

Repairing defective work is going to be necessary for every tradesman at some point.  But if that defective work results in property damage or personal injury to another person, this becomes more complicated.  If you are found to be liable for damage or injury to a 3rd party, costs can add up quickly – and can be high enough to cause bankruptcy.  As such, it is vital that tradesmen have appropriate insurance in place to protect their business and personal finances.

Is Faulty Workmanship Covered Under Public Liability Insurance?

Certain aspects of faulty workmanship will be covered under a tradesman’s Public Liability Insurance policy.  Again, each case is different, but in general terms, costs incurred as a result of property damage or personal injury caused by faulty workmanship will be covered.

Most Public Liability policies will not cover the costs associated with rectifying the faulty workmanship, regardless of whether this work is taken out by your own or another business.

Minimising Your Risk of a Faulty Workmanship Claim

While mistakes are inevitable, there are certain precautions you can take as a tradesman to help you preserve your reputation and your business, such as:

  • Be clear with your customers from the start about the scope of work you are completing
  • Be sure to communicate and document any changes that occur throughout the completion of a project
  • Upon completion, verify with the customer that work has been completed to their satisfaction
  • If there are any disputes, try to work together with your customer to address them appropriately. Consider options such as refund, repair or replacement.
  • Notify your insurance advisor if you have a loss
  • Know the terms of your insurance policy. Contact your insurance agent if you have questions regarding your coverage you have.

Faulty workmanship and defective work can be a confusing area of insurance. Speak with your insurance adviser if you have any queries about what you are covered for.

Disclaimer

Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.

The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.

Top Commercial Risk Exposures

Top Commercial Risk Exposures of 2018 Revealed

Renowned Insurer Allianz released its Risk Barometer for 2018 in January, identifying the Top Business Risks for 2018.

Risk managers, underwriters, brokers and other prominent insurance industry figures from across the world participated in the Allianz survey to identify the most prominent risks that businesses will face this year.  Business Interruption topped the list as the most important risk faced by companies globally, followed by Cyber Incidents and Natural Catastrophes.

Australian Business owners should be aware of the following risks, and consider the potential impact on their business so that they can identify the best strategies that will minimise their risk exposure in 2018.

Business Interruption

42% of respondents identified Business Interruption as one of the main risks for 2018, as a pause in trading can have a massive affect on a business’ overall revenues.  Triggers for Business Interruption are ever increasing.  Natural disasters and fires were previously the main cause for an interruption in business activities, however Cyber incidents are also a huge consideration for businesses in 2018. Cyber Incidents are on the increase, from cyber crime to technical failures or employee error, and while they don’t necessarily cause physical damage to the business, the financial impact of such an incident can be massive.

Cyber Incidents

Cyber incidents were identified as the 2nd most important business risk, from 40% of respondents.  The prominence of this risk has grown significantly in the last 5 years, when it ranked just 15th.  This is due to the increasing reliance on technology from companies across the world, which increases the chances of employee error or the chance of a data breach.  Furthermore, the number and severity of cyber attacks is increasing.  Cyber attackers are becoming more sophisticated and one attack can impact hundreds, sometimes thousands of companies.  It’s particularly important that SME business owners are aware of this threat as 43% of cyber attacks are aimed at small businesses.[1]

Natural Catastrophes

In 2017, insured losses as a result of a natural catastrophe reached a record-breaking $135bn.  This is the 3rd most important business risk in 2018, identified by 30% of respondents.  Due to the activity of the past year, businesses are worried that natural catastrophes may increase in intensity and frequency, which may have a negative impact on trading in 2018.  In a similar field, climate change was also defined as one of the top 10 risks.

It is important that you protect your business for the risks that it faces. All risks require tools and mitigation strategies to help manage and minimise the potential impact.  Your insurance advisor can help advise on covers that can best protect your business.


[1] https://smallbiztrends.com/2017/01/cyber-security-statistics-small-business.html

Disclaimer

Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.

The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.

Insurance Up to Date

Is Your Insurance Up to Date for 2018?

Buying Insurance isn’t something you can do once and forget about.  It’s important to continuously review your business needs and the policies you have.  The start of a new year is the ideal time to evaluate your business insurance policies to make sure everything is on track going into 2018.

You need to consider what kinds of things are likely to impact your business in 2018, and whether the current policies you have in place would adequately cover you.

Changes in Business Circumstances

Changes in your business circumstances will impact your insurance.  It’s important to speak to your broker in the event of any significant business changes as they may affect your policy, your premium and any claims that you have.  Consider your business activities over the last year, some of the things that may affect your insurance include: moving premises, renovating premises, acquiring or selling assets, installing security and changes in the number of employees.  Furthermore, revenue changes can have a significant impact on your policy and should be discussed with your insurance advisor.

Insurance Costs

In the new year you are likely to be evaluating your business outgoings and expenses and managing your insurance costs is an important part of this.  This is the perfect time to consider how you make your existing insurance payments and whether you may benefit from requesting higher excesses in return for lower premiums.  There are generally monthly options available to pay your insurance premiums, rather than having to pay in a lump sum annually. (Note additional charges may be incurred for monthly options).  Subject to your claims history, insurance policy excesses can also be adjusted to save money as taking a higher excess often results in lower premiums.

Some Questions to Ask Yourself

As a starting point, take a close look at the insurance cover that you have in place to ensure your policy actually matches what you need it to cover.  The following questions can help:

  • Do you have assets covered in your policy that don’t need to be covered?
  • Do you have assets missing in your policy that you do need cover for?
  • Does your policy cover your current revenue and value of your assets?
  • Have you made any significant changes to your premises that will require more insurance cover? Or do you plan on making any of these changes?
  • Are you happy with your current insurer?

Your broker will always endeavour to protect your business with the appropriate insurance cover.  It’s important that you don’t just wait for your renewal coming in to get in touch, particularly if something changes in your business.  Contact us any time for assistance with your insurance policy or risk management strategies.

Disclaimer

Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.

The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.

contractors

Risks Of Hiring Contractors – Are Your Contractors Properly Insured?

Have you made sure your contractors and sub-contractors are properly insured? Hiring a contractor can be a convenient option for small business owners. One of the primary reasons being that they provide their own insurance. However, the quality of their insurance could be a major factor if the unexpected does happen.

For example, if your contractor’s insurance only provides cover up to half a million, and they happen to incur damages above that, then you may be left with a deficit that could ruin your business. Another thing to consider when hiring contractors is that they have all the relevant cover options for the work they are doing. If you hire a tradesman you should expect them to have adequate professional indemnity, worker’s compensation, contract works, property damage and public liability insurance.

How Do Employees And Sub-Contractors Differ?

Often we like to think that there are firm distinctions between employees and sub-contractors. However, in practice a worker can be deemed a sub-contractor for tax purposes, but an employee for worker’s compensation purposes.

Different states and territories have different rules delineating between employees and sub-contractors. If you are unsure what category your sub-contractor falls under, seeking legal advice beforehand is a sound option.

What Types Of Insurance Are Compulsory?

There are three main types of insurance coverage that contractors need to have when making repairs to your business. They are worker’s compensation insurance, public liability insurance and property damage insurance.

It is important to note that worker’s compensation insurance is compulsory across Australia for all employees. This also applies to any sub-contractors your contractor hires.

If your contractor does not have these types of insurance they could be putting your business at risk.

Have You Got Something In Writing?

The last point is to get something in writing. Getting contractors or sub-contractors to sign a contract before commencing work is the best way to secure both parties legally. Consulting with a lawyer to draft a contract that articulates the chain of liability and has a well thought out indemnity clause, in case of death, injury or loss, is crucial

No matter what the project, and however many precautions are put in place, there is always the risk of injury to other parties or damages to property. If you are an employer or sub-contractor please do not hesitate to get in touch with us to find out more.

Disclaimer

Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.

The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.

trade credit cover

Rising corporate insolvency highlights importance of Trade Credit cover

Rising corporate insolvency highlights the importance for businesses to invest in Trade Credit cover, according to new report by credit insurer Atradius.

The Australian economy is for the most part stable contrasted with different economies in the locale and around the globe. Be that as it may, certain segments in the nearby market are confronting an intensifying insolvency problem, according to Atradius. This rising insolvency is not limited to Australia either, but is universal across the Asia-Pacific region.

Rising Insolvency in Australia

ASIC’s quarterly insolvency insights for the quarter finishing June 2017 demonstrated that the quantity of Australian organizations entering into external administration ascended by 28% from the past quarter to 2,198. On a somewhat positive side, the quarterly aggregate was around 3.7% contrasted with a similar quarter a year ago.

The areas that had the most insolvencies so far this year were the construction sector, with 403 in the June quarter alone, trailed by the accommodation and food industries, at 227 bankruptcies, contrasted with last year’s 316.

In an announcement, Atradius said the rising insolvencies in the Australian economy are reflected in the claims being paid out by insurers. The construction sector accounts for 50% of overall credit insurance claims paid in the last year. Insolvencies likewise represented around 75% of credit insurance claims paid – a slight decline from last year’s 79%. However, this is likely increase as of 2018 based on current insolvencies being seen across the nation.

“For some time now we have seen the construction and food and accommodation sector’s insolvency rate increasing,” said Mary Ibrahim, head of client services at Atradius. “For agriculture and food, this may in part be due to increased competition and changing consumer spending habits but for construction it is an ongoing trend. Insolvencies are also affecting the retail sector, which experienced 155 insolvencies. This affected many high-profile brands such as Topshop, Herringbone, and David Lawrence. It will be interesting to see what the sector does in the coming six months, particularly with the entry of Amazon into our market.”

Meanwhile, the transport, portal, and warehousing sector posted 95 insolvencies; manufacturing, 65; information, media, and telecommunications, 61; education and training, 50; electricity, gas, water, and waste services, 47; and rental, hiring, and real estate services, 39.

Rising Insolvency in the Asia –Pacific Region

In 2017, no countries in the Asia-Pacific region reported a decline in insolvencies according to trade publication Economic Outlook. The regional index ­­­has recorded a third consecutive yearly increase of +6%, with China recording a stronger rise of +10%.

Major bankruptcies, particularly in the maritime transportation sector, have been attributed to subdued global trade. While the expansion Chinese middle class promises to have positive benefits for the region, suppliers of industrial commodities and semi-finished products will continue to suffer.

Insolvencies are expected to stabilize soon in both Australia and New Zealand, however, significant regional variations continue to persist. There is an upward trend in Western Australia and Queensland, while other states are experiencing rising a property boom and decrease in insolvencies.

 

 

States Under Threat

Nation-wide, New South Wales had the most bankruptcies at 714, trailed by Victoria, with 649; Queensland, 374; and Western Australia, 309. Other states had a generally more modest number of bankruptcies – 81 in South Australia, 39 in Australian Capital Territory, and 12 in Tasmania.

All states posted an increase in the number of insolvencies from the past quarter – a checked difference to a similar quarter a year ago, when most states saw a decrease in bankruptcies, Atradius said.

“It’s important for business decision-makers to stay up-to-date on insolvencies and at-risk sectors so they can make smarter decisions when it comes to extending trade credit to certain organisations,” Ibrahim said. “This is a key part of due diligence. Companies can also protect their interests by taking out trade credit insurance, which is an affordable and reliable way to protect the organisation in the event a customer fails to pay.”

What Can You Do to Protect Your Business?

Trade Credit insurance or Debtor Insurance protects your cash-flow by covering your losses if a debtor defaults on payment or becomes insolvent, giving you the peace of mind to focus on running your business. There are many reason that contribute to a customer defaulting on their payment – tough economic conditions, reduced margins/increased costs, increased competition. Trade Credit can protect your business against these prevalent  issues. Companies can go become insolvent or bankrupt overnight.

On a typical balance sheet, uninsured debtors represent an average of 40% of a business assets, having Trade Credit insurance  may also boost your borrowing capacity with your bank. If you sell goods or services on credit terms you’re vulnerable to bad debt because no matter how efficiently you run your business, bad debts can be a problem.

There are various Trade Credit solutions to protect your business so please calls us to discuss the best options for your business.

For more information on Trade Credit cover, or other risk management strategies for your business, please don’t hesitate to get in touch with us. Find a local Authorised Representative Insurance adviser in your area online, or contact PSC Connect directly.

Disclaimer

Conditions apply for each policy and the information expected from you for a policy to trigger. Coverage may differ based on specific clauses in individual policies. Please ask your broker to explain the additional benefits and exclusions pertaining to your policy.

The information provided is general advice only and does not take account of your personal circumstances or needs. Please refer to our financial services guide which contains details of our services and how we are remunerated.