New Year Resolutions in Risk Management

We are approaching the two-year mark of the pandemic and, looking into 2022, there is still much volatility in the world economy.

It remains vital to focus on risk management going forward as commodity inflation and supply chain disruption continue to impact companies across the globe in 2022. While a recovery is on the horizon, it will be a long and winding road.

These are factors mostly outside of our control, but adopting the following New Year resolutions will support your risk management strategy and business goals.

Prepare for supply chain shake ups

Companies should be ready for supply chain disruptions. Look for additional sources and invest in higher-than-normal inventory to allow for increased and unpredictable consumer demand. You can diversify your supply chain and customer base to alleviate some risk, but keep in mind that tighter credit control is also necessary to bolster risk management.

Trade credit insurance can mitigate the risk of payment delays and defaults if supply chain issues lead to late payments or non-payments by end-buyers.

Protect cash flow

Cash needs to be monitored, protected and controlled to maintain a healthy business. This can help your business in assessing the credit worthiness of a buyer throughout the relationship by monitoring their finances and providing a guarantee of payment.

Banks tend to view companies with trade credit insurance more favorably. Banks that lend to businesses that are protected by credit insurance are more likely to extend larger credit amounts and better terms.

Trade credit insurance provides the stability and peace of mind that your company will be paid regardless of issues with vendors.

Fortify customer relationships

Customer relations are the backbone to making sure your business operates efficiently in trade relationships. A company should never go into a new trading relationship feeling uncertain about their customers’ ability to pay.

Some key factors to look for when vetting a new customer include:

• How long they have been in business
• How large their company is
• What the customer’s industry sector looks like

Understanding the supply chain from every level will give you more confidence when offering credit terms for timely payment.

When our risk team underwrites a new customer, they review the customer’s ability to repay over the short term. Then they verify their position within the supply chain and audit their payment history. Based on this information, the team will recommend whether the customer is worthy of a new partnership.

With the team at Atradius working for you, you can focus on day-to-day business and simultaneously have complete access to Atradius’ tools and support for continued growth and protection.

Credit insurance with Atradius can be used for both domestic and export trade, with personalized options available for your needs. If it sounds like credit insurance is right for you, we can offer a free quote today. You can also learn more about our trade credit insurance offerings here.