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Jargon-busting There’s some financial jargon confusing enough to make even the most savvy business leaders clam up. But not understanding it can be crippling, so read it here in plain English

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redit insurance, delayed payments, protracted default – not exactly the kind of lingo you hear at parties. But the tongue-twisting syllables actually mask some really simple and important concepts every business owner must be at least be aware of. Bad debt Whether it’s due to bankruptcy or inexplicably going silent, when a customer doesn’t pay for what you sold them, or isn’t likely to do so, it’s known as a bad debt. In other words, their credit becomes worthless as you can’t foreseeably collect it. For SMEs, bad debts can prove particularly challenging. Late and delayed payments In the eyes of the law, late payments are when money for goods or services takes more than 60 days to arrive after the customer receives their invoice or the goods and services are delivered and the mutually agreed

payment date between the seller and the buyer passes. The problem here lies in the fact businesses need regular income to cover monthly overheads, wages and other expenses, especially if they’re relying on just a few sales coming in. And although you’re permitted to charge late-paying customers 8% interest, a delayed payment of up to 60 days is enough to seriously harm, if not destroy, small companies. Credit insurance This means money owed to you or your business gets received one way or another. This can mean providers putting pressure on late-payers on your behalf, sending a crack legal team to sort out non-payers or identifying a debt which can’t be collected. It can be a lifesaver for companies hoping to grow fast yet struggling to keep tabs on an everincreasing list of clients, as well as exporters who can trade without fear of being duped by companies operating under different rules overseas. CREDIT MEANS CREDIT | COFACE

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Profile for Elite Business Magazine

Coface - Credit means credit  

Coface - Credit means credit