An uncertain economic climate can have wide-reaching effects in the business world, with many companies folding under the mounting weight of financial pressure. The construction sector is particularly vulnerable to changing conditions – something which is evident within the Australian landscape. And while the big players make the news, Peter Ghaleb, Trade Credit Manager at Coverforce, said it is the smaller firms who are really struggling – with many of them often left to recover debts from insolvent companies.
“The ones that are really hurting are the smaller businesses – simply because they have nobody to turn to. There is no government grant, no government assistance, no one to turn to to recover their money,” Mr Ghaleb explained. The insurance expert went on to say that while employees can always put their hand out for financial assistance in the event their boss goes broke, the same can’t be said for employers. “If you’re a small business and you’ve lost the money, then you’ve lost the money – there’s no safety net,” he added.
But it’s not all doom and gloom for the construction industry, employers can ensure financial security – and in turn, business resilience – by investing in a trade credit insurance policy. This kind of insurance cover protects the lifeblood of a business by strengthening its credit control and management – ensuring that in the event a debt can’t be paid, day-to-day operations will not be jeopardised. “It [trade credit insurance] means survival,” Mr Ghaleb said. He added that insurance cover is also beneficial for companies looking to take on new work, with it providing peace of mind to contractors that a firm has enough cash flow behind it.
“Sometimes people ask for retentions or bank guarantees,” Mr Ghaleb commented. “But if you have trade credit insurance, you can say ‘not only do I have good financials, but I also have protection in case someone doesn’t pay me’. It’s not going to have that knock-on effect. “With the financial situation of debtors completely out of a company’s hands, investing in cover will provide peace of mind to employers, knowing that in a tough economic climate their operation is equipped to manage financial obstacles.