‘What would happen in your largest customer was to fail?’
NCI Trade Credit Insurance are one of the leading providers in Trade Credit Insurance in Australia. The team at NCI recently shared with us a Case Study example which demonstrates the value of getting this type of cover in place as soon as possible.
Trade credit insurance can help to protect businesses against the financial risk of non-payment from customers.
It basically acts as a safety net for your accounts receivable, covering losses if a customer becomes insolvent, defaults on payment, or faces other covered risks like political instability in export markets. This type of insurance helps maintain cash flow, protects your balance sheet, and can even boost your borrowing capacity.
Case Study: XL Express
- A transport client approached NCI earlier this year to secure cover on XL Express.
- Due to a lack of financials and negative market information, most insurers were unable to provide cover.
- NCI secured a partial limit of $350,000 on XL Express
- The advice to the client was to secure the cover obtained now and NCI would continue to reappeal to improve cover
- The client sat on the decision for weeks and the quotes were due to expire
- XL Express entered voluntary administration the day after leaving the client exposed to over $1 million in unpaid debt.
The opportunity to protect even part of the exposure was there, but waiting cost the client significantly more than the premium ever would have.
This is a strong example for clients managing large exposures, particularly where one or two customers represent a significant portion of their receivables
Over the years, we have introduced many clients to the team at NCI Trade Credit Insurance – if you would like us to introduce you to our representative there, give our office a call today.
