Business Assurance Archives

Business Assurance

Minimise your risk

While business may be about risk and reward; wherever possible you should look to mitigating those risks as far as is possible – this is why you need to consider Business Assurance.

Business assurance refers to a several interventions that may implemented to provide protection against some of the inherent risks a business is faced with across the various areas of operation such as below.

Succession planning

Credit insurance

Business interruption

Retention of staff

Replacement of Assets

The implementation of a business assurance plan not only provides certainty but also liquidity to ensure that your business is able to overcome some of the potential critical risks faced.

Business assurance, especially in smaller companies, can also be used to give you business a competitive advantage.

Succession planning

Buy and Sell

Many businesses have two or more owners whose interest in the business represents a significant portion of their wealth, if not their largest asset. Often there in no plan is place for that owner’s estate/beneficiaries to be able to realise that value should they be unable to continue in the business owing to death or disability as the remaining shareholders may not have necessary cash to purchase that owners interest.

Through a “buy and sell” arrangement the shareholders can ensure that the business continues unhindered and avoid unintended situations

Keyman Insurance

In any business there are inevitably certain key individuals with specialist skills or knowledge.

If such an individual were to die or become disabled it would be a significant cost the company. By proper planning using Keyman insurance this risk can be mitigated and ensure that such an event is merely a hiccup and not a disaster.

Credit insurance

Contingency liability protection

An owner of a business, especially in its formative years, you are often required to stand surety for any loans or other credit facilities the business may secure. Should you die these liabilities are transferred to your estate which could have a devastating effect on your estate planning.

By putting contingency liability protection in place, you can sleep with the peace of mind that this exposure is suitably managed and that your beneficiaries will not be impacted.

Credit Loan Insurance

It is often said that a new company is like a new-born baby as it needs feeding every few hours. Shareholders often commit a lot of their wealth that they have managed to build up into their new company in the form of a shareholder’s loan.

Should a shareholder die or become disabled the loan will be called up; however, if the business does not have the available cash to settle the loan it will be forced to sell some of its assets and it may even result in the executor of an estate putting the company into liquidation. These issues may be resolved by putting in place appropriate credit loan insurance.

Business interruption

Company

The life blood of any business is the income that it generates. The disability of the business owner will have a detrimental impact on the short-term income flows and the potential the long-term sustainability of the business, if the business cannot maintain its business overheads.

Business overhead protection is available to mitigate this risk.

Personal

In additional to protecting the company the business owner can insure their own life with through income protection to replace any income lost during their permanent disability and ensure that they continue to receive a salary until the age of 70.

Retention of Staff

The retention of key staff poses a challenge for most companies, especially smaller or medium sized business. Two effective ways of being able to retain staff and avoid the cost of staff turnover are:

Preferred compensation scheme

A preferred compensation scheme may be implemented for selected/key employees who receive tax-free bonuses every 5 years.

Corporate retirement annuity

Owing to the cost of setting up a corporate retirement etc. many companies leave it up to their employees to make their own retirement provisions. The disadvantage of this approach is that the employees do not have a sense that the company is invested in their future well-being and many employees make insufficient retirement provision.

The introduction of a Corporate retirement annuity can address these issues.

Asset Replacement Provision

A business that requires expensive capital assets to be able to generate an income faces potential challenges when that equipment needs to be replaced or the operations need to be expanded. If the business does not plan its cashflows properly it is left having to approach financial institutions for loan finance with the inevitable security and surety requirements which significantly increases the business risk.

By investing in an endowment policy, a sinking fund policy or unit trusts (i.e. forced savings), a business can build up capital to assist with the purchase of capital equipment and avoid having to secure third party funding.

Business Assurance Services

We offer a comprehensive range of business assurance solutions backed up with

Any legal documentation and agreements necessary to support these solutions
The tax implications of implementing any of these solutions

Our business assurance policies are underwritten through Momentum, an industry leader in offering business assurance solutions.

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