Why do business leaders choose to renew trade credit insurance?
Once a business has used credit insurance for a year, their business leaders usually want to keep it. Here we look at some of the reasons why.
This year’s Atradius Payment Practices Barometer Survey reveals an interesting result. Businesses with trade credit insurance told us they intended to continue using it, or to continue using it along with other credit management tools, to protect their accounts receivable. The results were truly eye catching. In the markets with strong and established international trading routes, the commitment towards their trade credit insurance policy reached 100%.
Growth x 2: ‘We aimed to improve our credit processes and doubled our revenue’
The Chong Cheong Foundry Works in Singapore took out their first trade credit insurance policy with Atradius in 2019. In just two years the business unit which took out the first policy saw their revenue double. General Manager Kelvin Teo explained that the company first took out a credit insurance policy as he wanted to develop “a consistent approach towards assessing credit.
However, in addition to improving the company’s internal processes, their credit insurance policy helped them achieve impressive growth. Kelvin Teo said: “The business unit which took out the first policy saw revenue double between 2019 and 2021 and we are projecting to continue that growth. In addition, having a more mature and credible credit control process has given our main investor the confidence to grow the business and invest more in us.” The planned expansion includes the building of a new foundry, five times larger than its current location, and the development of a new presence in Indonesia.
Growth x 10: ‘Growth and mitigating risk go hand in hand’
The fuel and lubricants business, Petro National, is the wholly owned Australian subsidiary of the Japanese Eneos Corporation. Less than four years after taking out an Atradius credit insurance policy, Petro National experienced tenfold growth. CEO Brendan Evans told us: “Growth and mitigating risk go hand-in-hand. Trade credit insurance lets us minimise the potential for loss and provides confidence to expand the business on that basis.”
“ Trade credit insurance lets us minimise the potential for loss and provides confidence to expand the business .”
For Petro National, the credit insurance policy has helped the company streamline and accelerate their existing strong credit management processes. It does not replace their credit department, but enhances their work and helps to deliver impressive results for the company. As Brendan Evans added: “Largely, we won’t do business with a customer if Atradius won’t approve them. This helps Petro National to verify our own internal processes with regard to credit, and further reduces the risk of making business decisions that won’t contribute to growth.”
30 years of renewals: “We have virtually doubled our finance by having insurance in place”
Ausfine Foods is an Australian exporter trading dairy and meat products around the world, including buying and selling from Australia, New Zealand, USA, Europe and Asia, including the Philippines, China, Indonesia, Korea, and Malaysia. The company has used credit insurance throughout its 30-year history, renewing every year without fail.
“ Having trade credit insurance means we can achieve higher levels of funding from the bank to support the deals we want to do, and we have virtually doubled our finance by having insurance in place. This also lets us respond quickly to opportunities as they arise.”
Operations Director Garry Embleton explained that credit insurance is integral to the business’s operating model. He said: “Having trade credit insurance means we can achieve higher levels of funding from the bank to support the deals we want to do, and we have virtually doubled our finance by having insurance in place. This also lets us respond quickly to opportunities as they arise.”
He added that the quality of the business intelligence that Atradius provides as part of the credit insurance policy is as important as the insurance itself. He said: “Insights from Atradius have helped us look more closely at what areas of business we shouldn’t be involved with. This has let the business grow to a point where we can say no to some potential customers.”
Grow faster than your country’s GDP
Research by our colleagues in Australia found that businesses with Atradius credit insurance grew twice as fast as the national average. Policy holders in the country grew on average by 4.71% over the past three years. GDP growth for Australia over the same period, however, was just 2.03%. The data sourced from the Australian Bureau of Statistics was compared to Atradius customers’ declared turnover growth against seasonally adjusted GDP from Q1 2019 to Q4 2021.
What’s more despite the rise in inflation, by the end of April 2022 Atradius credit insurance policy holders in Australia were reporting business growth of 13% on average. There is no reason why such successes cannot be replicated across regions.
You can learn more about how businesses use Atradius trade credit insurance in our library of case studies. You can also hear direct from business leaders on why they choose to stay with Atradius when renewing their trade credit insurance policies.
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