Insurance Premium Funding for business cash flow
Insurance is necessary business expense, but paying a large annual premium upfront can put pressure on cash flow.
For businesses managing vehicles, equipment, staff, suppliers and day-to-day operating costs, that one payment can tie up money that may be needed elsewhere.
That is where Insurance Premium Funding can help.
What is Insurance Premium Funding?
Insurance Premium Funding allows eligible businesses to spread the cost of their insurance premiums over regular repayments instead of paying the full amount upfront.
The funder pays the agreed insurance premium, and the business repays the funded amount over an agreed period, together with applicable interest and fees.
It can be a useful option for businesses that want to keep more working capital available throughout the year.
How can it help business cash flow?
Reduce the impact of a large upfront payment
Instead of making one significant annual payment, the cost can be spread over scheduled instalments.
This can make insurance expenses easier to manage alongside other business costs.
Keep working capital available
Cash may be needed for wages, fuel, stock, equipment repairs, suppliers or new business opportunities.
Premium funding can help businesses avoid using a large portion of available cash on insurance all at once.
Make budgeting easier
Regular repayments can be easier to include in monthly cash-flow planning.
This can give businesses better visibility over outgoing expenses throughout the year.
Manage multiple insurance policies
Businesses often hold several insurance policies across vehicles, equipment, property and liability.
Depending on the arrangement, eligible premiums may be able to be included within one funding facility.
What types of insurance can be funded?
Depending on the funder and policy, Insurance Premium Funding may be available for a range of commercial insurance premiums, including:
- commercial vehicle and fleet insurance
- equipment and machinery insurance
- public liability insurance
- professional indemnity insurance
- property and general business insurance
- Workcover Premium
- other eligible commercial insurance policies
Is Insurance Premium Funding right for your business?
Premium funding will not suit every business.
It is still a finance arrangement, so interest, fees and repayment obligations may apply.
The right option depends on factors such as your available working capital, premium size, cash-flow position and the total cost of the funding.
The key is to consider whether preserving cash within the business is more valuable than paying the premium upfront.
Talk to PMG Finance
At PMG Finance, we help Australian businesses explore finance options that suit the way they operate.
If a large annual insurance premium is placing pressure on your cash flow, our team can help you understand whether Insurance Premium Funding may be suitable for your business.
Contact PMG Finance on 07 4639 1011 to discuss your finance options.
DISCLAIMER: The above content is to provide general information and does not constitute financial, legal or other advice. This means that duties and requirements imposed on people who give financial advice do not apply to this content. For advice contact your accountant or legal advisor.