Is your trade protected from protracted payments or non-payments?

One of the reasons we restrict our growth is a lack of awareness about what's available to us to tackle adversity. And that's the key factor that prevents our growth. 

The Indian economy has matched rather exceeded pre-covid GDP growth.

India is the 5th largest economy today. Experts are of the opinion that India will become the third largest economy by 2047. 

In an interview, External Affairs Minister S Jaishankar endorsed the statement by paraphrasing a word- "At Least". He affirmed India would "At Least" be the 3rd largest economy by 2047.

But where do I stand as an individual entrepreneur? Am I into the race?

We need to explore all available opportunities in order to maintain healthy CAGR in a competitive world. All MSME scheme guidelines related to our business should be known to us.  

In addition, there is also an available tool to expand your horizon. And that is 

Trade Credit Insurance. It's available for exports and domestic trades as well.  

Here I would like to focus predominantly on domestic trades. 

Any company that sells goods and services on credit terms and is exposed to the risk of non-payment can opt for this insurance.

It's evident that this insurance policy helped many grow their business. 

Let's understand how it benefits and where it limits.

So far you've been dealing with a set of buyers based on your trade history. Though being a known set of buyers, you still would have faced some defaulters. This, further, would have limited your domain by not exploring buyers outside the existing list of buyers fearing the risk involved with buyers you never dealt with.

The good news, for you, is that Trade Credit insurance doesn't only protect you from bad debts or insolvency of your existing buyers but also it gives you the freedom to explore untapped markets.

Trade Credit Insurance boosts your overall turnover as it is able to approve credit for new buyers and also offer higher limits to existing buyers based on their rating. Insurers share rating of each buyer that helps you make appropriate business decisions as to where you can increase credit limit and where you are required to be cautious. 

This policy is ideal for those traders or manufacturers or service providers who sell their goods or services on an open account basis. 

The policy helps keep your balance sheet clean and healthy and also helps improve your bottom line quality of business by increasing profits. Moreover, this policy facilities you with increased access to finance from banks. 

To conclude, the risk associated with unpaid invoices may take away your cash liquidity, imbalancing future business plans. Trade Credit Insurance is an effective tool that secures unforeseen financial risk and thereby it becomes a growth making tool that an entrepreneur must opt for.

It takes a lot to bind this policy. There will be a good amount of to & fro from both the sides, the insured and the insurer. This is essential to cover actual required risk. 

We will continue to understand more on the policy buying requirements part or on claim part in my next blog on the same subject. Also we will understand the exclusion part also.