The difference between credit and self insurance.
Credit insurance and self insurance are two very different risk management approaches. Self insurance simply means setting money aside in case of bad debt. Often, companies keep a sum in a separate bank account for emergencies only.
This approach to business protection harks back to the days before insurance was invented. It requires businesses to have constant vigilance, strong risk mitigation practices, and - quite often - a lot of luck. It also mean you must forgo investment in your business in order to protect against the unknown.
In an increasingly complex business environment, self insurance is just not enough. Customer insolvency or non-payment is simply one risk of many your business will likely face. Ensuring you have a comprehensive solution, such as trade credit insurance, may be the difference between business growth and bankruptcy.
Is the risk of self insurance worth it?
Avoiding insurance premiums may be a big factor in your company's decision making process. Self insurance allows your business to choose how much you'll reserve for emergencies while avoiding ongoing premiums. But what happens if your loss is higher than expected? Or if it occurs more than once?
Self insurance funds can quickly dry up and, suddenly, the cost of a premium is a small fraction to the overall impact to your business. it also frees up capital to invest in sales growth, market expansion, or other opportunities. Many smart businesses agree, the risk and opportunity cost of self insurance is just not worth it.
Get more with credit insurance
One of the best things about trade credit insurance is that it's so much more than just protection from non-payment. With a Coface policy, your business has access to our comprehensive, global risk expertise. This includes access to financial information on 80 million companies around the world, expert risk underwriters, economist updates, and so much more.