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Insure and grow Credit insurance can safeguard your business and help establish a stable platform for growth, explains Coface UK Director of Risk, Grant Williams. usinesses in Northern Ireland have endured a challenging few years during which survival was the number one priority. Now the improving economic outlook has provided some welcome breathing space, there is a great opportunity for enterprising companies to plan for the future and explore new export markets. In many ways, Northern Ireland is already forging ahead. For example, the economic development agency, Invest NI, exceeded its target for job creation in 20141, generating an additional £300m in annual salaries to boost consumer spending power. However, the agency also fell some way short of its fouryear goal for boosting export growth, achieving 4.9 per cent against a target of 20 per cent. And this neatly encapsulates the structural imbalance within the wider UK economy that the Government wants to address: consumer spending represents a more significant driver of economic growth than exports. One current hindrance to export growth is that manufacturers’ confidence has been hit by concerns about the weakening euro and continued problems in the Eurozone2. This matters because Europe is such a significant market for businesses in Northern Ireland. The Manufacturing Sales & Exports Survey 2013/143 reported that exports saw an 8.6 per cent rise in real terms over the year. But while the value of sales to the Republic of Ireland grew by 9.9 per cent and sales to the rest of the EU increased by 16.3 per cent, exports to markets outside the EU rose by just 4.9 per cent.
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Going for growth It’s well recognised that businesses that explore new export markets can expand their customer base and boost sales, as well as reducing their dependence on the EU. And there is no shortage of emerging countries with the potential for dynamic growth and a growing population of middle-class consumers, including Indonesia, Turkey, Colombia, Peru, the Philippines and Sri Lanka. Taking advantage of such growth opportunities inevitably requires investment and an appetite for risk but many businesses are inhibited by the fear of excessive financial losses, and it can be a frustrating struggle to secure the funds necessary from investors for new ventures. In this situation, you might be surprised to hear that working with a reputable credit insurance provider, such as Coface, can make a real difference. The traditional purpose of credit insurance – protection in the event of bad debt – is just one of a number of benefits
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that could help unlock the potential of your business:
1. Evaluating risks in overseas markets It’s important to take every opportunity to research your chosen export market, including the economic prospects, the likelihood of political instability and the business climate. To this end, Coface’s experienced economists produce regular reports and assessments of the trading situation in different countries and within industry sectors to help you research potential markets. Our business climate assessments will highlight weaknesses in corporate governance and corporate law which could jeopardise the enforceability of your contract.
2. Current intelligence about potential business partners It is not always easy to access up-to-date and accurate intelligence about the trading record and financial health of domestic and overseas companies. However, Coface has access to a global database which tracks the trading behaviour of over 65 million companies, as well as underwriters on the ground to monitor local trends.
3. Cashflow protection in the event of payment default Customer insolvency and protracted late payment jeopardise your cashflow, making it difficult to pay staff, suppliers and meet other business obligations. It’s a major cause of business failure but credit insurance means you can be confident of recovering the value of an insured bad debt. Coface has developed a range of credit insurance policies to meet the needs of different businesses, from SMEs to multinationals. All protect policy-holders in the event of non-payment by domestic and overseas customers and include debt collection. As well as traditional whole turnover polices, it is also possible to obtain cover for strategically important customers or specific short-term risks.
4. Make your business more attractive to commercial lenders A credit-insured business represents a demonstrably better risk for investors than one which is vulnerable to the failure of one or two customers. Many Coface customers have found that their
policy provides evidence of financial security to banks and other sources of finance, improving their credit options and borrowing terms.
5. Streamline the credit management process All Coface clients have access to Cofanet, an online policy and credit management tool which allows them to apply for credit limits on new customers; monitor and adjust existing limits; view a real-time snapshot of the distribution of credit risk in their portfolio; and send messages directly to our underwriting department. For more information about Coface in Northern Ireland, contact Chris Moore, Coface Business Development Manager on +353 86 607 2328. Coface Ireland Suite 5, Adelphi House Upper Georges Street Dun Laoghaire Dublin, Ireland (01) 230 4669 www.coface.ie References: 1 Invest NI beats targets in record year for new jobs, BBC News online, 19 May 2015 http://www.bbc.co.uk/news/uknorthernireland 32801990 2 Quarterly Economic Survey: Recovery continues, but pace slackens, Northern Ireland Chamber of Commerce and industry, 21 April 2015 www.northernirelandchamber.com/chamber news/quarterlyeconomicsurveyrecoverycontin uesbutpaceslackens/51416/ 3 Results from the Northern Ireland Manufacturing Sales & Exports Survey 2013/14, Northern Ireland Statistics and Research Agency, 3 December 2014 www.detini.gov.uk/mses_2013_14_pdf.pdf