Managing debtors efficiently: the benefits of premium funding

High interest rates and inflation are impacting the borrowing capacity of businesses. Many now face limited options to manage cash flow and meet payment obligations.

One of the resulting trends is an increased amount of businesses relying on extended credit terms. This means they seek longer invoice payment terms from their suppliers. Extending credit terms has a domino effect through the payment chain. Even the most successful operations end up with less cash to pay their own bills – including their insurance.

In Atradius’ Payment Practices Barometer 2024, 59% of polled businesses said they now relied on trade credit. Polled businesses also reported a 35% increase in credit offered to their own customers.

"Given the increase in trade credit, more businesses are effectively being asked to fund the short-term cash flow of their customers, be it through requests for longer payment terms on credit, or greater overall credit limits. The survey found that payment terms were extended by Australian businesses by nearly two weeks."

- Atradius Payment Practices Barometer 2024 

As clients juggle their cashflow, brokers are having to spend valuable time and resources following up outstanding invoices.

Clients value convenience. Offering premium funding as a payment option gives customers a helpful solution that:

• Preserves their existing borrowing capacity.
• Reduces the pressure of affordability so they can consider appropriate cover.
• Eases their financial planning by spreading the lump sum cost evenly across the year.
• Gives confidence of a fixed rate lending solution that doesn’t need Director’s guarantees or more collateral.
• Provides a total customer solution that requires little action. Premium funding offers a quick and easy approval process versus alternative lending options.
  

With invoice payment times extending, it is a great time to focus on debtor management. Discussing premium funding can help your clients to pay their invoices on time.

Premium funding accelerates invoice payments and can help clients afford the insurance protection they need.

Insurance brokers play a crucial role in nurturing their clients' financial health. By discussing the benefits of premium funding, brokers show they are tuned in to what their clients need. It’s not just about keeping clients happy — it's about making sure they stick around.

Our data shows that when a client opts to pay by premium funding, they renew, on average, for the next seven years.

Top tip: When talking to your clients about insurance, discuss the option of premium funding early on. It can factor into many decisions the customer has to make about their insurance program. Affordability is likely to be front of mind for all business owners in this environment.

In today's digital world, efficiency is everything. Premium funders have tools that make quoting fast and accurate. Brokers can get quotes out to their clients instantly, no matter where they are or how complicated their insurance needs. It's a time-saver that makes the whole customer experience smoother.

Brokers with sustainable, high growth premium funding portfolios do these key things:

• Always create quotes through the provided interface. This saves you time throughout the entire loan journey with automated debtor marking and invoice management – including banking. It also prevents costly errors and omissions.
• Offer a quote with every invoice. This is even easier with background/invoice funding.
• Use online quote pathways. Our paperless links and background funding allow for automatic assessment. Also, in most cases, instant approval.
• Make the most of rollover features. Hunter offers both automatic and manual options. Rollover lets the client renew and close invoices without having to wait for paperwork.
• Talk about payment options with your clients at every renewal – even if they paid cash before. A lot can change for a business in 12 months.

If you’re not sure you’re taking advantage of all the premium funding features, ask your account manager for a review. Make sure you streamline your funding operations and make the most of what we have to offer.

For brokers, getting more clients on board with premium funding can make a big difference. The simplicity of premium funding gives brokers more time to service clients and focus on more essential tasks.

Top tip: Teach your clients about the financial benefits of premium funding. Show them how it can help manage cash flow better and spur business growth. Hunter has a brochure you can share online to help customers learn more.

Insurance premium funding can be a strategic tool for insurance brokers. It can help strengthen client relationships, streamline operations, and drive revenue growth. Leveraging digital processes further enhances efficiency and customer satisfaction, positioning brokers as agile and client-centric partners in the insurance industry.

By partnering with Hunter, your clients receive the same exceptional level of service and support they get from you. With many businesses facing insolvency and payment defaults, Hunter is known for trusted, sustainable lending solutions. This means you can be confident in recommending us to your clients.

• An expert team to help you streamline your premium funding for your clients.
• A transparent, simple and competitive fee and interest structure. This means clients can more easily consider their payment options.
• A genuine and public commitment to help customers who are experiencing financial hardship. We help more businesses get back on track when times are tough.
• An accredited premium funder committed to proactive complaints management and customer satisfaction.

To learn how premium funding can help you and your clients, speak to your Hunter account manager. They can show you how your premium funding portfolio measures up.