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Code for cashflow – premium funding can help with budgets
With prices for just about everything rising, it’s more important than ever to carefully manage budgets and the ongoing costs of running a business.
While many expenses such as utility bills are paid monthly and spread over the year, those coming around on an annual or irregular basis can involve large sums that add to the stresses of managing cashflows.
Commercial insurance is typically one of those annual expenses, but strategies to manage the cost can be considered ahead of time and put in place.
That’s been more of a focus in recent years as premiums have increased, while currently renewals are taking place in a business environment that has become more challenging.
Supply chain pressures have fuelled inflation, labour is in short supply, wages are increasing and economists expect interest rates may rise further following a series of upward moves so far this year.
Against that background premium funding, which spreads the cost of insurance over the course of a year through regular instalments, becomes an attractive alternative compared to annual lump sum payments.
Premium funding providers have raised their profile this year with the release of an inaugural industry code of practice that commits to high standards that go above legal requirements, offering greater peace of mind for clients around a financial service that’s often not well understood.
The Australian Finance Industry Association (AFIA) and insurance premium funding working group members consulted extensively on the code, which promotes transparency, clear communication and continuous improvement in customer service.
The code outlines hardship assistance procedures if a client falls into financial difficulties, and sets out rules for prompt and fair resolution of disputes, including through internal and external processes.
The commitments are backed up by the introduction of an independent committee tasked with monitoring and investigating code compliance, ensuring the document has some teeth.
The AFIA says the code is an important tool that protects businesses, especially small businesses, while supporting competition and innovation.
A number of financial sectors have launched new or improved codes of practice in recent years as they focus on becoming more customer-centric and more pro-active around self-regulation. It particularly makes sense in a volatile economic environment.
With costs rising everyone is looking for the best deals available, but it’s important not to cut corners on the most important things, such as insurance, while finding ways to manage cash flows and budgets.
We offer premium funding because we believe it can be a tremendously useful tool in managing risk. Talk to us about how you can smooth out annual premiums.