Credit insurance is an indispensable tool for companies seeking financial stability and protection against the risk of default by their customers.
With growing economic uncertainty and challenges in commercial relations, credit insurance has become a strategic ally in business risk management, guaranteeing liquidity, confidence and sustainable growth.
Credit insurance is, therefore, a financial mechanism that protects companies from late payment or, in the worst case scenario, non-payment of debts by customers. It is especially advantageous for credit transactions, both domestically and internationally. Besides, this solution acts as a safety net for the company’s revenues.
Among the various features that can be associated with this insurance, we can highlight the following:
- Coverage against default risks;
- Management of debt collection;
- Detailed risk analysis;
- Coverage in Portugal and abroad.
Keep reading and discover the main advantages of credit insurance for your company.
Benefits of Credit Insurance
Implementing business credit insurance brings numerous benefits to financial risk management, allowing companies to operate with greater security and confidence. Here are some of the advantages of this insurance:
1. Improved liquidity and financial stability
Credit insurance frees up resources intended for debt collection, allowing them to be redirected towards expansion initiatives or investment in new projects. This positive impact is reflected in greater financial stability, better cash management and the preservation of profit margins. Let’s consider a hypothetical but possible scenario. Imagine that your company, a supplier of car parts (for example), has seen important customers stop paying due to economic difficulties. Without protection, the business was in danger. If you had credit insurance, you would be able to collect the outstanding amounts, maintain your company’s financial health and continue operating without interruption.
2. Cost reduction and operational efficiency
Since the insurer takes responsibility for debt collection, companies are able to reduce the administrative costs associated with this process. This results in greater operational efficiency and significant savings over time.
3. Image of trust and credibility
Contracting credit insurance conveys an image of financial stability to customers and suppliers. This factor increases the company’s credibility in the market and strengthens business resilience.
4. Improving relationships with banks
This insurance, which is a sign of trust, makes it possible to improve the relationship between companies and financial institutions, facilitating access to bank financing – as is the case with factoring.
5. Cost reduction
Credit insurance minimizes the costs associated with debt collection and risk analysis.
Credit insurance extends to companies of different sizes and sectors, and is also an asset in the following aspects:
- It allows companies to grow confidently;
- It is a response to new regulatory requirements;
- Facilitates billing management;
- It presents itself as a strategic resource.
Implementing credit insurance is not just a protection measure, but a solid growth strategy. According to a recent report in Executive Digest, “seven out of 10 companies identify financial problems with customers as the cause of late payments”. Therefore, this insurance protects the economy by preventing the chain effect of bankruptcies and the subsequent impacts.
Famasegur, with over 25 years’ experience and in-depth knowledge of the market, is the ideal partner to ensure that your company obtains the best conditions for financial security. With customized solutions for all types of companies and sectors, our specialized team will guide your business towards more effective risk management and greater profitability. Don’t leave your company’s future to chance – invest in credit insurance and build a solid foundation for sustainable growth.
