It is obvious that COVID-19 has ruined the world’s economy. The World Bank estimates that the global economy contracted by 4.3 percent in 2020. This staggering figure is only matched by the world wars and the great depression. Late payments have been on the rise in every western country.
Although the pandemic isn’t over, it is beginning to recede and recovery is possible. You should consider Niche trade credit if you don’t have credit insurance. Their experience is over 30 years and they can offer the best and most appropriate insurance.
Their exceptional service is evident in the testimonials of their customers. It is easy to protect your cash flow from any credit default or payment default. There is an increase in business failures today. The main reasons are poor cash flow management and trade receivables.
Late payments increase
The staggering number of unpaid invoices reached 47% in Western Europe during the pandemic. France and Italy are the countries that have suffered the most from the pandemic. Even countries that didn’t take the initial impact are now at an all time low.
More than 38% of Western European businesses are concerned about outstanding invoices. Even countries that are prosperous like the Netherlands report that 20% of their businesses will have difficulty collecting outstanding invoices by 2021. B2B customer liquidity limitations are the main reason for delayed invoices.
The delay in payments has led to a series of consequences that have ripple effects across the globe on the global supply chain.
Credit management tools are the saving grace
Survey results show that people are more committed to a tighter credit management system. A multitude of businesses have stated that credit management tools help to protect their accounts receivables in the face of bankruptcies and insolvencies. Credit insurance was used by around three-quarters of the businesses during the pandemic.
Trade-credit insurances can be a powerful tool for helping businesses to trade safely and increase their profit. This comes with the much-feared risk of a default payment. Due to the recession risk, some businesses in the West European region had taken out self-insurance to protect their account receivables.
Many of these businesses have been documented as having set aside funds to cover future losses. This suggests that businesses have learned the importance of protecting assets during economic emergencies.
Conclusion
To save your business and yourself from a bad economic outcome, credit management is a good idea.