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Businesses urged to utilise credit insurance

As the country’s current economic and trade environment remain constrained and unpredictable, credit insurance experts are urging businesses to recognise the benefits of trade credit insurance to protect their bottom line.

Of late, there has been proof that businesses, large and small, face greater risks and possibly even closure due to major debtor defaults and balance sheets that are often not strong enough to pull them through a major and extended financial crisis.

Against this backdrop, the Botswana Export Credit Insurance (BECI) stressed the importance of protection to mitigate business risks.

Speaking at a media briefing this week, BECI general manager, Cowell Habana said in such an environment, credit insurance for business has become an absolute necessity as businesses could face decreasing sales and turnover.

He said businesses need to put appropriate measures in place to insure their debtor’s book against liquidations, non-payments and business rescue scenarios.

He added that trade credit insurance is an extremely effective tool to grow one’s business faster, adding that any business owners in Botswana are waking up to this fact.

“If you are constantly making a high level of sales, but struggling to collect cash on time due to forces beyond your control, then your business will always struggle to scale

up and pay you the rewards you deserve,” said Habana.

He further indicated that BECI, which aims to help entrepreneurs in Botswana to minimise credit risks, improve cash flow and focus on growing their businesses, offers three types of trade credit insurance policies.

These include the domestic trade credit insurance policy, which allows the business to cover its local buyers and is available to businesses selling goods or services on credit basis, with an established credit control department or credit management processes in place.

The other policy that is recommended for exporters who have not been paid upfront for goods shipped, allows an entity to cover its outside customers in different countries.

In addition, businesses could take the trade credit insurance pre-shipment policy that protects them during the period of pre-delivery.

“The policies cover non-payment of an insured debt due to insolvency of the insured buyer, protracted default, which is the failure of your buyer to effect payment for an undisputed debt within six months after due date, and political risks,” he said.




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