Increase your sales by extended credit terms and higher credit limits
Volker Bromund
![Volker Bromund]()
Volker Bromund
Expert for ECA Financing (Export Credit Finance), Consultant & Advisor for BayernLB Bank Germany Structured Finance for Indonesia, KfW DEG German Desk Indonesia, Green Finance Specialist
Payment terms and account receivables are always a topic when strategies are internally discussed how to increase sales and do more business with existing or new customers.
Extending payment terms to longer tenors or increasing supplier credit lines are often requested by customers - but granting that has three major impacts:
1. the cash flow will be delayed and many suppliers don't have the liquidity or credit lines to allow such extended credit terms.
2. The longer the payment terms the higher the risk that in the future the customer cannot pay and will default as he will use the revenues from his customers not to pay the supplier but will use the funds for other purposes.
3. Higher credit limits increase the risk of higher losses in case the buyer defaults and this might significantly impact the profitability of the company with all its consequences.
How to mitigate these impacts/risks? With Trade Credit Insurance.
Credit insurance protects your business from non-payment of your invoices. It makes sure that you will be paid and allows you to reliably manage the risk of trade.
What are the main advantages?
1) Business Growth: accept new customer debt and increase the limits for existing customers. Expand into new markets and customers which you have not serviced so far.
2) Better Bank Financing: if your receivables are insured the bank might also increase your working capital limits
3) Better Risk Management: have a better and professional assessment of existing and new customers, reduce losses and increase profitability
4) Prevent Bad Debt and optimize risk management and account receivables management
Trade Credit Insurance can provide insurance for your entire accounts receivables portfolio or can insure single payer risk - for Indonesian buyers or buyers world wide. Trade Credit Insurance is an affordable and cost efficient way to increase sales and still reduce risk for your business.
In case you want to learn more please feel free to contact me.