Trade debts can make up 40% or more of business assets. The cost to a business of non-payment can be considerable. If you have a 5% profit margin and suffer a £100,000 debt, you’ll need to win new sales of £2 million to make up for the lost profits. Just a few instances of failure to pay can make a big impact on your cash flow, meaning you will have less capacity for investment and growth. Your cash flow situation is measured by banks and finance providers who could charge higher interest rates if they consider your cash flow is poor.
Consider these effects and what they might cost when you think about the value you will gain from trade credit insurance.