Using trade credit insurance to drive smart sales growth

15 October 2024

Within a company, conflict can come in many shapes and sizes. From a squabble over who left their half-eaten sandwich in the shared fridge for three months, to disagreements about managerial styles, an office—virtual or not—can be a breeding ground for disputes. But nowhere is friction more frequent than between a company’s sales force and its credit department.

How often has someone on your sales team celebrated a big win, only to be told the sale won’t go through because there isn’t enough information about the customer to justify extending credit? It’s a classic problem: Sales wants to grow the top line, while credit wants to protect the bottom line. And before you know it, each side feels like the other is trying to sabotage its work.

The key to collaborating effectively is for both teams to work towards the same goal: driving sales through improved decision-making.
 

The dynamic between a company’s sales force and its credit department often resembles that of rival teams, with one blocking the progress of the other. But, ideally, they should operate like the offense and defense of the same side: one fending off the biggest obstacles on the field, to let the other gain enough ground to score. The team wins when a profitable new customer relationship has been established.

Even in uncertain economic times, one of the keys to driving sales is forging new customer relationships. But it has to be done in a safe and calculated way, based on thorough credit assessment that goes beyond a handful of trade references and a scant credit report. However, companies often lack access to enough information to support their credit decisions, especially when put to the scrutiny of an aggressive salesforce.

Risk underwriters mitigate risk for their customers. But, more importantly, they should help them understand the risk so they can safely expand their business.

The core of trade credit insurance is enabling companies’ credit teams to support business growth alongside the sales force. When an insurer covers a sale, the customer can use credit as a differentiator and be more aggressive, for example by offering longer payment terms or a higher credit limit.

The more extensive the insurer’s database, the better their access to invaluable customer information, based on data from a worldwide network of analysts and clients. These analysts have local expertise, and customers that give information about their payment experience with their clients. This confidential financial information about companies gives much deeper insight into their strengths or weaknesses. It helps spot high-risk companies before it’s too late, and can help explain why a particular sale can’t be insured. Comprehensive financial insights also facilitate dialogue between credit and sales teams so they can jointly decide whether or not it’s worth selling on terms.

Risk underwriters should help create dialogue and nurture relationships, whether it’s between companies and their customers or a company’s sales force and its credit department. At Allianz Trade in Canada, we aim to help companies grow with their current customers as well as take on new ones, often in new industries, markets or countries.

We take pride in our ability to forge connections, and are focused on leveraging our extensive knowledge to facilitate our clients’ growth. If only we could help limit the risk of half-eaten sandwiches lingering in office fridges, too.