There are 4 things that will happen to your business if a big customer goes bust… and you don’t have credit insurance.
- Your credit control team or you will waste really valuable time trying to find out what’s going on. It’s surprising how quickly you’ll become invisible to a business that previously enthused about what you were offering them. While you might feel sympathy for their plight, they will have put you in a precarious position and you probably won’t fully understand the circumstances that led to their demise.
- You won’t be able to make extra sales. The revenue you were anticipating in your bank would have provided cash flow to fund the next recruitment or marketing campaign. It might have been a pay-per-click ad campaign or some PR you had planned to push in the second half of the year. Or it could have been the new sales person you were set to hire. Either way, the lack of cash flow will leave you with a sales hole worth a multiple of the amount you’ve just lost.
- You’ll have to refuse trade credit to your other customers. Faced with such risk, it will be prudent not to make the same mistake a second time, which will mean denying other good and valuable customers the same benefit of dealing with you. This could lead to you losing customers – and more revenue.
- You will have to cancel your planned expansion. The series of events that started with one important customer going bust will have serious ramifications on the growth prospects of your business. You’ll need to cut your investment accordingly and de-risk every deal you have in the pipeline.
One way to avoid such a fate is to take out credit insurance before the doomsday scenario becomes a reality. The protective shield around you also comes with a debt collection solution, which can be especially important if your business operates in overseas markets, where language, time zone and legal system differences can complicate your ability to secure payment.