Five Reasons Why Credit Insurance Strengthens Business Growth
More and more companies are using credit insurance to grow safely in tough times. But the benefits extend far beyond risk minimization. Here are five reasons why credit insurance can be a key to growth.
In an era of growing credit risks, more and more companies – large and small – are discovering the value of insuring their accounts receivable. According to the industry organization Kredit- och garantiförsäkringsföreningen’s (KGFF) latest report, the use of credit insurance is increasing in Sweden.
“A credit insurance enables safe business in turbulent times,” says Camilla Arwin, risk underwriting manager at Atradius and board member of KGFF.
But credit insurance is more than “just” protection. Used correctly, it becomes a strategic weapon for faster and safer growth. Here, Camilla Arwin shares five reasons why credit insurance is a good idea for all types of companies.
Stronger Cash Flow and Better Balance Sheet
In a tougher economic situation, cash flow becomes extra important, according to Camilla Arwin.
“With credit insurance, you know you will get paid, either by the customer or by us. This reduces the need for provisions for customer losses and strengthens both cash flow, balance sheet and the company’s negotiating position with banks and financiers.”
When credit risk decreases, capital can be released for investments, while the company’s largest asset – accounts receivable – is protected.
“Other assets on the balance sheet, such as properties or personnel, are always insured. But people forget the large part, which is accounts receivable.”
Grow in New Markets Without Increased Risk
Expansion into new markets often involves uncertainty about both local players and regulations.
“Then you might choose not to sell on credit, or to use other types of solutions, which are often expensive and make it difficult to negotiate with new customers.”
But with credit insurance behind them, companies can more safely offer credit even where they have no history.
“We are a global company celebrating one hundred years and have enormous experience and knowledge database. This gives our customers better market insights and security in taking business in new markets,” says Camilla Arwin.
Data-Driven Decision Support Instead of Static Reports
Traditional credit reports can be based on data that is over a year old.
“But historical payment patterns say nothing about whether a company can pay in a week, month or 60 days.”
Credit insurance combines information from credit reports with ongoing analyses from millions of companies.
“Our global networks collect continuous data, which is then analyzed with AI models. This gives CFOs guidance on which customers are safe and which require other payment terms.”
Flexibility to Act When the Risk Situation Changes
In today’s global business landscape, changes can occur from one day to the next. Value chains are long and a disruption in one part of the world can have major consequences for a company elsewhere.
“Our models quickly pick up anomalies and payment disruptions. This allows us and our customers to act directly.”
This speed reduces the risk of being affected by chain effects when something happens in another part of the value chain.
Access to Risk Reports and New Business Opportunities
In addition to risk reduction, companies with credit insurance from Atradius gain access to a wealth of data and tools.
“Our risk maps, reports and payment barometers help our customers dare to enter new markets or find new customers that match their own customer database,” says Camilla Arwin.
It can be directly useful in daily sales work:
“Many use our tools at trade fairs. They can check potential new buyers, and assess their credit rating on the spot. In this way, they can directly determine which ones are worth investing in.”
About Atradius
- Global supplier of credit insurance, guarantees and collection
- Operates in over 50 countries
- Approximately 3,500 employees
- Customer loyalty: 95 percent retention rate
- Reduced risks corresponding to 928 billion euros in potential exposure in 2024
- 100 years of experience in assessing and managing credit risks
This article was produced by Brand Studio in collaboration with Atradius.
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