Article published by Christine Noordberg on the Laval Technopole website, February 16, 2015Article

Accept New Large-scale Contracts with Complete Peace of Mind

The purpose of trade credit insurance is to help your business avoid catastrophic losses and to increase profitability. But how can trade credit insurance facilitate safe business growth in new countries and markets?

Faced with an increasingly competitive business climate and a general credit crunch, many companies have restricted the growth of their business due to self-imposed credit limits. Moreover, making decisions to increase sales to new or existing clients and markets can prove to be difficult. Without financial information, businesses must ask their domestic or foreign buyers for deposits, advance payments or letters of credit.

Many businesses are comfortable offering a certain credit limit to their clients. However, a large number of them cannot guarantee entrepreneurs, or their bank, that orders that exceed previously awarded credit limits will be paid.

Trade credit insurance allows businesses to lower their requirements and also facilitates safe growth of your business in new countries and markets. Therefore, it can enable you to increase sales while helping you transfer a client from a letter of credit to an open account. It can also allow you to become more competitive by offering more flexible sales conditions.

Unpaid invoices are often due to a lack of relevant information regarding your clients' creditworthiness. The credit insurer can help you choose the right clients, the markets and the credit limits that you need. You will also feel more confident to develop new markets and focus your efforts on larger buyers.

Any information, even negative, is valuable to the insured party. If a buyer cannot be approved by the credit insurer for reasons such as negative net worth, negative cash flow and losses incurred, your efforts may be better spent elsewhere. One option is to negotiate progressive billing before delivery with the buyer or cash upon delivery.



  Client Current Customer Credit Limit Credit Limit Approved by the Insurer
to Make the Sale
  Domestic buyer 400 000 $ 800 000 $ 400 000 $
 Country A 300 000 $ 600 000 $ 300 000 $
 Country B - New Market 0 $ 400 000 $ 400 000 $
 • Potential limit increase
 • Average number of sales per customer
 • Potential increase in sales
 • Gross profit margin
 • Potential gross profit due to the increase in credit limits
1 200 000 $
4 800 000 $
10,0 %
480 000 $

For a solution that is customized to your needs, call Noordberg & associés Inc., a brokerage firm with over 20 years of experience in trade credit insurance.
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