Andy Moylan FCICM, founder of EFCIS Trade Credit Insurance Brokers, explains why businesses need to act fast and invest in Trade Credit Insurance before recession becomes a reality premiums rise and limit restrictions are introduced.
With 32 years’ experience as a Trade Credit Insurance specialist broker working with global brands and as a keynote speaker at local and international venues, Andy Moylan has become renowned for his expertise. And for his uncompromising manner, delivering tough messages minus any gift wrap.
Never one to shy away from courting controversy this interview with Dee Blick is no exception.
Q. You were quoted recently saying that businesses are slow to take out Trade Credit Insurance. And this could cost them dear. Please explain.
Let’s look at the economy because all the signs are we’re heading for a global recession. Massive increase in energy costs leading to price hikes on everything we buy from food to fuel. Inflation is at an all-time high with the Bank of England calculating we’re heading for double digits come Autumn. And with global inflation putting pressure on funding, the cost of borrowing is increasing. We have a war that’s disrupting the international market price of oil and gas not to mention crops and oil. The Furlough scheme has ended and bounce back loans need repaying. The stage is set for insolvencies to rise and for weak growth to be accompanied by high interest rates. On our home turf we are seeing a significant rise in overdue invoices which almost always precipitates insolvencies.
Yet despite these ominous signs and warnings, too many businesses in the UK are still failing to put risk – and how to manage it effectively – at the top of their list. Their priorities centre on how to get the goods in, sell at the right price and have enough working capital with little thought on the compelling need to really bullet proof their sales ledger. They don’t see that Trade Credit Insurance is the ultimate business enabler; a tool that protects their biggest business asset – their sales ledger. But until insolvencies have reached a certain level, they won’t join the dots and focus sharply on their receivables. It’s not in the psyche or on the radar until a bad debt hits hard or a supplier pulls their credit line and then all hell lets loose.
Only then will some start to explore Trade Credit Insurance. Based on my experience in the game, I’m certain we will see a hike in premiums in the next 6 to 8 weeks with limit restrictions accompanying this. So, now is the time for companies to come off the fence and talk to us so they can explore the benefits of Trade Credit Insurance without prejudice and, crucially if all the signs are good, they can act without delay.
Q. Why are some businesses reluctant to have Trade Credit Insurance?
I think some boils down to a lack of awareness of the benefits. Then you have those that don’t think they need it when our conversations reveal they really do. Then the biggest group – businesses that have turned away from it due to preconceived ideas that on close inspection are flawed. For example, they think premiums are too high; their customers would never become bad debtors; they will always have enough working capital to buy goods and expand etc. If a business trades in goods or services, offers credit terms and uses working capital to fund growth and purchases I would encourage them to talk to us.
They will find us approachable and honest. If it’s clear they will benefit from Trade Credit Insurance, we’ll demonstrate why and how. If not, we’ll be just as frank and forthright! We are highly skilled in securing coverage for clients, often on the most challenging risks. These skills are needed now more than at any time in our history. It’s worth saying here that a well-run Trade Credit Insurance policy can secure working capital to support the growth of the business. A company with an increase in the level of insured debt of just £250,000 could potentially draw down an additional £200,000 of working capital to support growth or, even pay for supplies in advance for a discount. In the current climate just how valuable is all of this? Reason enough to start that conversation with us now.
Q. Many brokers offer Trade Credit Insurance. How do you offer that all elusive added value?
Our core business is Trade Credit Insurance. It’s in our DNA. We don’t sell other types of insurance and as the sole UK member of the International Credit Brokers Alliance, we help businesses to trade successfully in 46 countries. We are fully fledged specialists with all the knowledge, experience and expertise that accompanies this. And we’re champions of business, so we look at Trade Credit Insurance as an enabler for real, measurable growth.
We have amassed decades of experience in finance and global trading and bring this experience to the table for every single client. We have excellent, time served relationships with all the Underwriters and are skilled at negotiating limits and at working closely with them during a claims process to secure a positive outcome. Clients benefit from our unique ARC software which monitors ongoing policy compliance day in and day out. And of course, our client base is testimony to our expertise. We work with household name global brands and many businesses with an appetite for growth. Talk to us!
Q. How would you react to those saying you are creating an artificial deadline by referencing 6 weeks?
I speak from experience and have enough skin in the industry to see the signs and interpret them with a high degree of accuracy. And I’m a voracious reader so every day I’m looking at the latest economic and financial reports to ensure my knowledge is up to date. How many businesses previously regarded as safe as houses have gone under in the last few years? This is set to continue. When insolvencies rise Underwriters understandably revisit premiums and policy conditions.
Premiums are currently competitive relative to the cover offered but this will not continue. Why would a director of a business not explore the benefits of Trade Credit Insurance now when in 6 to 8 weeks’ time they could be facing a hike in premiums and possibly a restriction of cover?
It doesn’t make sense at all. My unerring message is that Trade Credit Insurance is an enabler for business growth. It protects your biggest asset; your sales ledger and it enables you to trade with confidence and certainty because your biggest and most fluid asset is the money owed. Now is the time to act because in the coming weeks all the signs are that the status quo will change. Those still sitting on the fence are likely to regret the lack of action.