In today’s unpredictable financial world, managing your credit risk smartly is key to staying afloat.
For businesses in Tasmania, nailing down the right strategies to handle risks could be what helps you to thrive. This guide, from RSM Tasmania Insurance Brokers, spills the beans on seven Top Tips to keep your business financially secure.
At RSM we pride ourselves on providing the business insurance Tasmania needs, offering commercial advice and insurance cover that is second to none.
1. Get to Know Your Debtors
It all starts with knowing who you’re doing business with. Make sure you’re clued up on the full scoop — names, addresses, contact details, and other vital bits of information on the companies you deal with. If a business has changed its name or uses an Australian Business Number (ABN) that’s linked to a trust, it’s crucial to know who’s behind the curtain.
2. Stay Ahead with Your Invoices
Why wait for the due date? Keeping on top of your invoices early can keep your cash flow smooth and dodge those awkward cash crunches when customers drag their feet. This proactive move not only helps you stay agile but also lets you adjust quickly to any economic swings that might affect your business.
3. Make the Most of the PPSR
The Personal Property Securities Register (PPSR) is your best mate for keeping tabs on personal properties used as loan collateral. Registering your interest here means you’re first in line legally if things go south with a borrower. Always check the PPSR before you leap into credit agreements to make sure you’re not stepping into risky waters.
Click here to dive deeper into PPSR.
4. Nail Down Personal Guarantees
Getting personal guarantees from company bigwigs or private individuals adds an extra layer of security. These promises are your safety net if the company hits a rough patch. But keep them fresh — update any changes like names or contact details to keep them effective.
5. Sharpen Your Credit Scoring
Setting up a sharp credit scoring system can save you a ton of trouble. This system should be a mix of old data, new trends, and some smart guesses about future risks. It’s your crystal ball to figure out who’s good for the credit and who might be a risky bet.
6. Keep Your Credit Policies Fresh
With the financial scene always changing, keeping your credit policies up to date is a no-brainer. Regular check-ups and tweaks help them stay relevant and robust against emerging risks. This routine maintenance is like a health check for your business’s financial defenses.
7. Consider Trade Credit Insurance
If your accounts receivable start to climb north of $50,000, trade credit insurance might be your next smart move. This cover shields you from the pain of unpaid debts, keeping your business from financial hiccups if a customer doesn’t pay up. Plus, it’s peace of mind, letting you offer more credit without the sweat.
Taking out trade credit insurance with RSM Tasmania not only secures your business against bad debts but also supports your growth by allowing you to safely extend more generous credit terms. At RSM Tasmania, we’re all about giving you that extra layer of security so you can focus on what you do best—running your business.
And there you have it—seven top tips to tighten up your credit risk management.
With RSM Insurance Brokers by your side, you’re all set to handle whatever the financial weather throws your way.
Interested in getting tailored insurance advice? Talk to Roger Hosie from RSM Tasmania.
Call Now! (03) 6244 7854, or email
