3 ways your customer could run your business into the ground

Even if you have an excellent working relationship with a customer who pays promptly, they could go bust or make a bad decision that directly affects your business. Despite his best intentions, if a customer doesn’t have the funds to pay you, you don’t get paid, and that could leave you at serious financial risk.
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What scenarios do you need to be wary of and how can you protect yourself against such an eventuality?

1. Bankruptcy

If a customer declares themselves bankrupt, they will be under certain restrictions for the duration or unless they cancel their bankruptcy. This could leave them incapable of paying you for a while, exposing your business to financial risk.

2. Insolvency

Whether your customer doesn’t have enough liquid assets to pay their debt to you (cash flow insolvency) or simply doesn’t have enough assets to pay what they owe full stop, an insolvent customer is a risk to your business and your cash flow.

3. Non-payment

If a customer simply fails to pay you on time, you need to know as soon as possible so you can make up for the financial shortcoming. They could have any number of reasons for not settling their debt, whether it is because the invoice was forgotten amongst a barrage of other to-dos or because they are also waiting on a payment. But while you’re spending time trying to figure out what’s going on, you’ll be delaying payments yourself or holding off growth ambitions.

Even if an inability to pay is just a temporary, the domino effect of late payments can have a serious impact on your business. Don’t expose yourself to being knocked over as soon as your customer falls. Protect yourself with a trade credit insurance.

Trade credit insurance protects you against the risks of non-payment and bankruptcy of your clients. You benefit from the guarantee of payment of the products and services you delivered, even in case of bankruptcy. In case of non-payment Euler Hermes will indemnify you after 60 days.

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Jan 22, 2020 | Non-payment

Nonpayment warning signs to protect your business

If one of your customers goes bust, this could have a serious impact on your financial stability. Do you know the warning signs your customer is about to go bust? Make sure you protect yourself against the consequences.

Oct 29, 2019 | Non-payment

Here's how to avoid the snowball effect of unpaid invoices

Compared to 2018, bankruptcy numbers are up again, and their effects hamper global economic growth. How can you stop a single unpaid invoice from snowballing?

Aug 27, 2019 | Non-payment

5 benefits of a professional debt collection agency

A friendly telephone call, a formal reminder and finally a registered letter, all of which remain unanswered. As an entrepreneur, outstanding invoices can have you at your wits’ end several times a year. In this case a professional debt collection agency is just what the doctor ordered. Below we’ve summed up five benefits.

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