Experts warn: 2024 will be another year of rising insolvencies in Germany Germany already recorded a sharp rise in corporate insolvencies in the second half of 2023, with an increase of 23% compared to the previous year.

The economic slowdown, increasing uncertainty and tighter financing and liquidity conditions are cited as the main reasons. The hospitality, retail and construction sectors are particularly affected, suffering from inflation-related cost increases and consumer reluctance to spend.

Especially in these difficult economic times, companies must have sufficient financial resources to overcome operational challenges. Credit insurance can help by protecting companies against unpaid invoices or outstanding receivables.

The top 5 reasons for credit insurance are explained below:

1. protection against bad debts

One of the biggest risks for companies is unpaid invoices. If customers become insolvent, this can mean considerable financial difficulties for the company. Credit insurance covers these risks and protects against the financial consequences of bad debts. In this way, companies can ensure that their liquidity is not jeopardised by insolvent customers.

2. securing cash flow

A stable cash flow is essential for the health of a company. Outstanding receivables can have a significant impact on cash flow, which can lead to problems in paying own liabilities. Credit insurance ensures that companies have the necessary funds to fulfil their own financial obligations even if their customers default on payment.

3. risk minimisation when entering new markets

Expansion into new markets is associated with considerable risks, especially if the creditworthiness of new customers is unknown. Credit insurance offers valuable support here by minimising the risk of payment defaults in new markets. By securing receivables, companies can expand with peace of mind and take advantage of new business opportunities without fear of financial loss.

4. early warning systems through creditworthiness checks

Credit insurance often includes credit checks on customers. These early warning systems help companies to assess the solvency of their customers and react to potential risks in good time. Regular credit checks enable companies to recognise at an early stage if a customer is experiencing financial difficulties and take appropriate measures to protect themselves against payment defaults.

5. professional debt collection

If payment defaults occur despite all precautionary measures, credit insurers often also support their customers with debt collection. Professional debt collection services increase the chances of successfully collecting outstanding receivables without the company itself being involved in the often laborious and time-consuming process. This not only saves resources, but also increases the likelihood that at least some of the outstanding receivables will be settled.