Make no mistake: Liquid asset protection and cash flow security is a HUGE benefit of Credit Insurance. A lot of companies have Credit Insurance for that reason alone.
But in light of some new research—and some important intel—we are here to tell you to forget peace of mind. Don’t worry about cash flow and if and when the money comes.
Now, you’re probably thinking we’ve lost our minds. Don’t worry about our cash flow??? Are you nuts? But hear us out. Because if what we’ve been hearing is true, business owners aren’t as concerned about cash flow as they are about something else.
Industry analysts agree that business owners are still doing due diligence when it comes to risk assessment: assessing political conditions, supply chain issues, labor and material costs, etc. And most of that is based on the principles of frequency and predictability, and the impact such factors would have on a company’s operations.
And in light in whatever information is gleaned from their assessments, good or bad, business owners seem to be continuing on business as usual so as not to stop the business of business. They’re taking more risks than they were pre-recession in order to grow, expand and take their companies in new directions. They seem to be confident enough that their sales and marketing platforms are strong enough to offset any profit losses they may incur.
In other words, business owners are forgetting about peace of mind, and taking leaps of faith in order to keep business flowing--and growing. The hope is that the money will follow.
Now, this falls in line with the business tenet that you have to spend money to make money, but it’s also counter-intuitive to another line of thinking: the greatest risk to your business is tied to the customer of highest financial importance. So if your number one customer, the one that represents the greatest sales revenue, suddenly goes away for whatever reason, you now have a huge hole that needs to be filled. And what’s also disappeared with your number one customer is your peace of mind.
Hence the main reason why we thought peace of mind is Trade Credit Insurance’s whole reason for being.
But now we’re not so sure.
You see, we recently had a trusted colleague, someone who’s been in the trenches for 30+ years helping business owners and CFOs, tell us that recently he’s seen a shift in his clients. Sure, they care about peace of mind, he told us. But what business owners and CFOs really want to do is just grow their businesses. They don’t want to have to worry about the particulars of their cash flow--the health of each of their clients, the different payment terms, etc. Those are nitty-gritties that most business owners don’t have time for.
Ford Motor Company is a great example. They have a complex supply structure, with dozens of firms supplying them with thousands of components ranging from the smallest nut and bolt to the largest car seat and instrument panel. They have a sophisticated model in place that assesses the predictability and impact of risk events. Having this process in place allows Ford executives to make sure current assets are exceeding liabilities—and it allows them to focus less on those time-consuming nitty-gritties and more on big picture items.
Now, your business may not be big or well-known as Ford. But the fact remains the same whether a business is big or small or somewhere in between: Business owners want to focus on is the bigger picture. How am I going to position my company for the 21st century and beyond? What products and services are going to be in demand, and how can I fulfill those demands? How can we grow and prosper?
Trade Credit Insurance answers those questions for business owners. A credit insurance agent is a trusted colleague who will tell you how your industry is doing, what markets are worth considering, and what companies would make good (or bad) business partners. A credit insurance policy, and the agent that manages it for you, helps you focus on the big picture.
And that, my friends, is the REAL reason most business owners have Trade Credit Insurance. It allows business owners to focus on growing their business—and lets someone else do all the worrying.
So while we think you shouldn’t let your peace of mind fly out the window, we do think you should worry about it a little less. And having a robust credit insurance agency as your trusted business advisor will allow you to do just that.