Avoid disruptions to your business income post-pandemic
After a tough year, many Australian businesses are relieved to see the economy begin to take a turn for the better. However, many are still tackling the aftermath of the COVID-19 restrictions and lockdowns.
Federal and State Government spending has been the key driver behind this momentum, with billions of dollars being invested in improving the economic outlook. As these initiatives wind back, it's feared some parts of the economy will take a hit.
The JobKeeper wage subsidy scheme, which offered $90 billion in critical support to firms to keep staff employed during the pandemic, has since expired at the end of March. Some temporary insolvency relief measures have also come to an end.
As firms adjust to this heightened financial pressure, they may no longer be able to meet their pre-existing commitments and outstanding invoices, which can have a flow-on impact on the enterprises they engage with.
Some analysts anticipate that when government measures are mostly ceased, "zombie" firms that relied significantly on this support will be unable to pay their debts and continue operating.
This is where trade credit insurance can make a real difference, and help firms avoid substantial losses due to their customers being incapable of settling their invoices due to challenging circumstances.
While smaller firms may not immediately consider this to be an option for them, there are trade credit policies available that have been designed specifically for SME businesses.
Cover can include a range of features, including mitigating the risk of loss. It also caters to your firm's specific situation, such as whether you're dealing with local trading or operating on an international scale.
Depending on your circumstances, general cover may not be your best option, and some firms are better off specifying particular debtors. If a certain amount of time lapses and the debtor hasn't paid their invoice, this may trigger your policy.
As with any insurance, it's always recommended that businesses take proactive measures to reduce and mitigate risks. But there can still be instances that catch you off guard, and in these situations, a trade credit policy provides protection.
While we're on the road to recovery, for many firms, there will still be challenges ahead. During these uncertain times, a broker can provide you with the invaluable peace of mind that comes with comprehensive trade credit cover.
How Coverforce can help
Coverforce is one of the few insurance brokers in Australia who have an experienced, in-house Trade Credit team. We provide tailored insurance solutions at competitive rates for businesses both in Australia and overseas.
For more information or to arrange cover, please contact your local Coverforce office.
The information provided in this article is of a general nature only and has been prepared without taking into account your individual objectives, financial situation or needs. If you require advice that is tailored to your specific business or individual circumstances, please contact Coverforce directly.
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