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How SMEs can mitigate the burden of late payments

According to latest research, nearly one in four (24%) of SME owners and managers say delays in payment of invoices have got worse in the past year, with 5% saying it has become much worse. This has a major impact on their cash flow and a knock-on effect to business operations, including the financing of their insurance, as more than one in eight (13%) of SMEs have found it harder to secure credit since the COVID-19 pandemic started.1

Around 12% say they now pay for all insurance monthly rather than in one lump sum as they did previously.1 But what else can you do to help mitigate the late payment burden?

Trade credit insurance

Trade credit insurance protects against the risk of non-payment by your debtors for services rendered or goods sold on credit, so whilst primarily there as a tool for protection, if used properly it’s far more than that.

A well designed programme can also be a tool for growth, it can improve and unlock access to financing, it can help mitigate risks before they materialise and it can optimise your businesses working capital, all whilst protecting one of the most important assets on your balance sheet.

As the economic climate becomes ever more volatile we are seeing more and more businesses turn to trade credit to mitigate risk, drive growth and optimise their working capital.

Find out more about what trade credit insurance is and how it can help protect your business

Premium finance

Premium finance can provide businesses with the ability to use a loan to pay for their insurance in monthly instalments. By managing insurance payments in this way, businesses can spread the cost of their insurance rather than pay their premiums in one lump sum. Other benefits include:

  • it can be kept off the balance sheet
  • it provides a fixed interest charge
  • the charges receive corporate tax relief
  • it preserves existing lines of credit and improves cash flow.

If you’d like to benefit from premium finance or trade credit insurance, please contact your Marsh Commercial advisor or get in touch.

Sources:

  1. youtalk-insurance.com ‘Premium Credit Insurance Index May 2022’
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