Insure to endure: How Trade Credit Insurance safeguards growth

Insure to Endure: How Trade Credit Insurance Safeguards Growth

What is your most important asset for you as a business owner? 

Yes, your employees are important, as is your data and intellectual property.

But what about your balance sheet? 

A healthy sheet means that you can borrow money for expansion or for lines of credit when needed – it keeps the bank saying yes. A key question employers need to consider is - do you get the turnover and profit you need to keep that balance sheet in a good state? 

Steering through 2025’s economic uncertainty 

As we know, times are tough at the moment economically, and 2025 is presenting more challenges. Ongoing geopolitical instability and changes in trade policies are arguably the most pressing concerns. This directly affects the ability of businesses to build stable and successful long-term strategies. These uncharted waters of geopolitical tension continue to affect supply chains, as does the ever-increasing threat of climate change. 

Inflation remains a major challenge driving up costs of raw materials, labour and energy, often narrowing profit margins and reducing operational efficiency. The Reserve Bank of New Zealand is working to control inflation which remains a key issue. While inflation has stabilized at 2.5% , cost of living pressures are building. Additionally, labour shortages are being felt across a range of different industries in New Zealand, particularly in healthcare and technology sectors, driving up wages and making it intensely difficult to find skilled workers. Finally, New Zealand faces ongoing housing market problems with a huge number of unsold properties and a lack of appetite in buyers.

So, the smart business owner is looking for ways to compete. 

If your competitors are offering extended payment terms for products and services to customers and you’re not, then whilst your product may be the same and you’re an equally viable option, those competitors are always going to win the business.

How can you resolve that anomaly? With Trade Credit Insurance. 

This is an insurance policy that provides cover to you should those customers to whom you’ve given extended terms, go into liquidation or indeed simply don’t pay you. Trade credit insurance looks to pay to a prescribed percentage of the debt, so you have that cashflow back and can carry on with running your business.
The benefits of trade credit insurance:

• Improves your financing 
• Sets you apart from competitors
• Deepens your relationship with clients 
• Ensures smarter credit decisions 
• Opportunity for expansion into new markets
• Without it, you might have limited transactions with any given partner

Who needs it? Anyone looking to increase their sales potential.

Knowing that you have the protection of those debts being insured gives you the opportunity to trade with confidence. If you are receiving funds from your bank, then you can look to assign a policy to them, and they can be more confident in your ability to repay that funding knowing that they will be paid by an insurer. They will often also look favourably at the interest rates you pay, as of course, you’re providing the bank with that extra protection.

As mentioned above, economically the world is a tougher place to do business and in 2025 this pattern is only continuing…We are seeing more liquidations of businesses, and this can be for a multitude of reasons, whether due to protracted default or customers going into liquidation. In New Zealand, business liquidation rates have soared in recent years. In the first quarter of 2025, there were 597 liquidator appointments. This represents an 18.9% increase compared to the same period the previous year.  The growing financial pressure on businesses is unmistakenly evident.

How can we assist you and your business? 

Howden has teamed up with a trade credit insurer that can serve small, medium, and very large businesses. Coface provides many tools that can help you in your business when it comes to understanding cashflow, providing credit reporting and recovery services, as well as paying claims. For small to medium businesses, they have simple on-line tools that provide ongoing support. The cost of premiums are also not substantial, when considering the security provided. For larger businesses there is a more in-depth process to follow, however, the process itself is not time-consuming or difficult – we are here to assist you every step of the way.  

Like us at Howden, Coface really wants to understand how your business works and assist you in doing more business confidently and growing more wisely. 

¹Statistics New Zealand, "Consumers Price Index: March 2025 Quarter," https://www.stats.govt.nz/information-releases/consumers-price-index-march-2025-quarter/, [accessed 12 May 2025]

²Companies Office, "Latest Company Statistics," https://www.companiesoffice.govt.nz/insights-and-articles/latest-company-statistics/ [accessed May 12, 2025]