What is Premium Funding?
Paying insurance premiums via Premium Funding over a number of months is now common practice within the General Insurance marketplace. Basically it is a line of credit you pay off in installments to ease the burden of your insurance accounts on your cash-flow.
Although there are other strategies for easing cash-flow such as:
- reducing covers;
- increasing excesses; or
- moving the policy expiry dates;
We have found that by having your insurance program all due at only one or two dates in the year allows for a more accurate review of your insurance needs and then allows us to keep the optimal cover whilst then paying for the total insurance coverage over installments.
Why would I use Premium Funding?
Firstly, it moves your cash-flow from one large fixed expense in one month to smaller installments over several months.
Secondly, you can arrange to pay premium funding installments with a deposit up front, so if you budgeted for an insurance amount but due to increasing turnover and business growth your insurance program costs have increased, you can put down a deposit and pay the shortfall over a few installments.
Thirdly, you can structure the premium funding payments. Although most clients opt to pay over 10 months, an example of shorter installment periods may be to ensure that all the payments occur in this financial year. (We can arrange funding from 3-12 month periods)
Lastly, the interest and fees applicable are a direct fixed expense in your business (100% tax deductible). Quotes show the interest rates and fees and are usually cheaper than overdraft and credit card facilities you may have access to.
BENEFITS TO YOUR BUSINESS
- Working capital stays in your business not prepaid to Insurers
- Cash basis BAS means you claim the total GST component in your next BAS (Check with your Accountant)
- Credit charges are usually less than conventional loan facilities and overdraft facilities
- The transaction appears in your Profit & Loss Statement as a normal operating expense
- There is no security over your business assets only a POA over your insurance policies
- Credit charges don’t attract extra GST
- No ongoing monthly service fees, only 1 upfront small application fee
How do I arrange Premium Funding?
As part of our insurance program we offer premium funding terms automatically. We are able to provide indicative terms straight away and show you the applicable instalment plan.
If you aren’t insured with us, don’t panic! We can offer premium funding on accounts we don’t hold.
We would however love the opportunity to provide you with insurance terms on renewal.
Nothing can replace professional expertise advice from an experienced Specialist Insurance Broker.
To arrange an introduction with our specialists, please either call 07 5313 7871 or complete the form below.