Recent years have not been kind on business, and it doesn’t look like it’s going to be easy for the next couple of years. For this reason, it is essential to protect yourself from all angles so that you don’t have to deal with any unexpected circumstances that could ruin you as a business.
The pandemic saw many businesses get help from the government through loans, grants and seed funding, business rates, furlough schemes, and other services that have been many businesses’ lifelines. Now, that these have gone, many businesses are looking for now at new methods to protect themselves from insolvency as help from the government has only delayed the inevitable for some.
For those businesses that have remained and managed to stay busy, they will be looking at innovative methods to grow their business further. In business management, this is naturally something you will be looking to do.
An important thing to understand when growing a business in a recovering market is the fact that you can grow your business too fast and overwork yourselves. Growing your business too fast can overstretch your resources and money which leads them to claim their trade credit insurance.
Trade credit insurance claims are on the rise which is not a surprise. The issue with this is that insurers are much more observant and are looking more closely into the claims for businesses failing to comply with their policies and conditions. This can in turn reduce you or even void your insurance claim.
In this article, we will go through how to prevent this from happening to you.
Documentation Is Essential
This is a one-way route to failure if you can’t comply with this. Documentation for everything is essential when making a credit insurance claim as many claims are rejected all the time for missing the essential documents as the insurers need proof. An example of this would be a client who couldn’t provide a delivery note. If you as a business can’t provide essential documents for proof, then you face a high possibility that your claim will be rejected.
To avoid this happening to you, ensure that everything is documented as you never know when you will need it. This includes delivery notes, invoices, and anything else you feel may be useful. A great way to store them is on your computer hard drive so that you always have them to hand. This will ensure that your claim is met.
Agree On A Credit Limit In Advance
One thing you should not do if you’re expecting a full claim is to rush a deal through before having the insurance accepted. Do not build up debt until you have agreed on a credit limit with your insurer as this can have some serious consequences and will affect your business affordability.
There are many (avoidable) instances of this incident where businesses will trade with buyers and then go to obtain a credit limit after agreed. This results in the company already building up debt whilst you have no limit.
When cases like this come to hand, the credit limit only applies when agreed on. This results in businesses making claims and only receiving part of the money. This is because any debt that was built before the agreement was in place, is not insured. If a significant debt is built whilst you have no credit limit agreed, this can result in your business becoming insolvent.
Beware Of Fraud
Due to a recovering economy, many unscrupulous characters come out of the dark in the form of scammers and fraudulent activity is much more likely. This is not covered by a trade credit insurance policy.
There is a ridiculous number of fraudulent techniques, but the most common is buyer impersonation. Due to your policy not covering fraud, it is vital that you do your due diligence, follow your credit control procedures, and do regular checks on everything. This will in turn help you to understand what you are dealing with so that you can protect yourself from being a victim of fraud. There are some things that you can do to help prevent this from happening to you including:
- Be vigilant when being contacted by a mobile number, landlines are the usual number to be contacted by a business.
- Be wary of a site that looks great but has very few pages or functionality. A well-established site will have a great user experience and a range of pages.
- A real business won’t use emails that are from Hotmail or Gmail, instead, they need to ensure that their email address has the company in it.
- If a buyer is not interested in negotiating the price, or simply doesn’t ask about the price, then you should have alarm bells ringing. Every buyer wants a cheaper price, and the price is what they want to know first.
There are many ways in which you can prevent a reduced or rejected credit insurance claim, follow these simple steps and you will have made good progress. For the best support and to find the right policy for you, it is best to speak to a credit insurance broker as they can help answer all of your questions.
- Blogger and Educator by Passion | Senior Online Media & PR Strategist at ClickDo Ltd. | Contributor to many Education, Business & Lifestyle Blogs in the United Kingdom & Germany | Summer Course Student at the London School of Journalism and Course Instructor at the SeekaHost University.