Understanding the retail downturn
Many businesses rely on strong holiday trading to help offset slower periods. But high interest rates, stubborn inflation, and shrinking family budgets have combined to create a perfect storm. As the festive season approaches, worsening conditions will further stretch businesses.
Trading conditions aside, businesses may need insurance cover to trade. And the rising cost of premiums will only add to their problems. This is where premium funding can be necessary.
Our CFO Beau Goodyear, CA, explains how premium funding can help retail business with insurance costs and ease cash flow pressures.
The retail thermometer
Rising borrowing costs and inflation
Household budget squeeze
How premium funding helps
The benefits of premium funding for retail businesses
Let's look at the advantages of premium funding for businesses caught up in the retail storm:
- Maintaining working capital buffers
Premium funding is a shield for working capital. It reduces the upfront cost of insurance into monthly payments. That means retail businesses can keep their cash handy for everyday operations, investments, and growth plans.
- Smoother cash flow
No more stressing about a large lump-sum payment. Premium funding helps retail businesses manage their financial obligations without the headache. By splitting insurance costs into smaller, monthly payments, businesses can streamline cash flow projections.
- Risk management
In uncertain times, managing financial risks is essential. Insurance is a key part of risk management. Premium funding makes sure retail businesses can maintain their coverage without making cuts elsewhere.
- Keep savings for essentials
With the threat of a credit crunch, retail businesses must avoid using savings to pay for insurance. Premium funding acts as a financial safety net, so they can keep their savings for other essential needs.
- Flexibility and tailored plans
Premium funding isn’t one-size-fits-all. It's flexible and allows customisation to fit unique policy situations, cash flow, and financial goals.
- Competitive edge
In retail, access to premium funding is like having an extra gear. It lets retail businesses invest where it matters most – marketing, inventory, and providing the best customer experience.
- Reputation and trust
Premium funding is a reputable lending option backed by an industry code of practice. Brokers can trust accredited premium funders as a proven way to provide extra working capital to their clients. It guarantees customer service and support when they need it most.
Businesses need to find creative ways to manage their finances. The retail environment is shrinking, with rising costs, inflation, and dwindling savings. Premium funding is that creative solution. It helps retail businesses secure the crucial insurance coverage they need. All without blowing their working capital, cash flow, or financial stability.
Talk to your clients about paying their insurance in manageable monthly instalments. You can help them navigate the challenging retail environment, especially this year-end, by recommending an accredited premium funder. This can allow them to focus on core operations, safeguard their savings, and remain competitive.
We’re proud to be an accredited member of the AFIA Insurance Premium Funding Code of Practice