Insurance Premium Funding: A solution to rising insurance costs & assisting business growth

Updated On June 25th, 2024By Dynamoney

Australian businesses, particularly sole traders and small to medium enterprises (SMEs) are struggling with increasing costs across the board. One area that has risen considerably is the cost of business insurance, including property, vehicle, workers compensation, public liability and professional indemnity insurance, right through to business interruption, directors and officers, cyber and credit insurance. With the growing level of uncertainty surrounding the Australian economy, protecting your business’s cashflow in the new financial year has never been more critical.

One challenge with insurance premiums is that most are usually paid annually, either at the end of the financial or calendar year. This means they can all come at once, placing further strain on budgets and cashflow. With the new financial year approaching, there is one way to avoid the hassle and added strain of having to pay all your premiums in one hit: insurance premium funding. While paying off insurance premiums monthly, as opposed to annually, is commonplace in the personal insurance market, many sole traders and small business owners are unaware that a similar solution exists for businesses.

An ideal solution to rising business costs

Insurance premium funding, also known as premium finance, allows businesses to combine multiple annual insurance premiums into one single monthly instalment rather than paying multiple lump sum payments to different insurers. This process frees up cash within your business and allows you to better manage all ongoing insurance expenses. At Dynamoney, we provide businesses with an insurance premium funding solution that will enable you to spread your payments out over monthly instalments. Our insurance premium finance also has added flexibility to combine all your insurance policies into one regular monthly repayment.

How exactly does insurance premium funding?

It is as simple as providing us with all the business insurance premiums you want to combine. We then create a payment plan, and once this has been approved, we pay the premiums directly to your insurance provider(insurance broker or underwriter) , whilst you pay the agreed monthly instalments to us as per the agreed contract.

At Dynamoney, our application process is simple and stress free. Compared to traditional bank loans, we require fewer background checks and credit reports. Easily rollover your contract year after year By executing our rollover option in the first application.

Benefits of insurance premium finance

Insurance premium funding offers numerous benefits for businesses. It can help manage rising costs and allow businesses to invest in growth.

Have the right coverage for your business

With rising insurance premiums, underinsurance for sole traders and small to medium businesses is becoming increasingly common as many look to cut costs in an effort to stay afloat. While there are some benefits to shopping around for the best deals, sometimes this can mean owners end up with the wrong insurance level or a policy that doesn’t have the level of features and benefits they require.

Insurance premium funding is one way to ensure you have the right level of coverage without having to pay it all upfront.

Predictable monthly repayments

With interest rate rises and fluctuations, an insurance premium funding arrangement provides a fixed rate, so you know exactly how much you need to pay each month.

No ongoing fees or hidden costs

With Dynamoney’s insurance premium funding, there are no ongoing loan service or security fees. You always know what you are insured for and how much you must pay.

Financial benefits

An insurance premium funding solution requires no additional security. Due to how it is structured, business owners may also be able to classify their premium funding facility as off-balance sheets, which can improve their financial standing, free up working capital and make it easier to access debt finance in the future.

Potential tax deductions

A potentially tax effective solution, the interest can sometimes be claimed as a tax deduction. Check with your account to see if this could work for you? – or similar?

Free up working capital and manage costs

More and more sole traders and small to medium businesses are looking to insurance premium funding to manage costs and free up working capital. You can keep on top of expenses without impacting your business’s line of credit through one monthly repayment instead of multiple annual repayments.

Rapid access to funds

At Dynamoney, we offer same day approval and funding for your insurance policies, subject to credit approval.

Administration savings

Insurance premium funding can create more efficient administrative processes through one single premium funding arrangement paid monthly.

An overlooked option for growth

For small to medium businesses and sole traders struggling to access funding and manage cashflow, insurance premium funding offers far more than just the ability to spread out repayments. It can also a simple way to better manage your cashflow or free up money for other business investments.

As illustrated in the table below, it is an equal, if not better, option in some instances to more traditional sources of debt finance.

To find out how insurance premium funding can benefit your business, contact our team today for expert guidance and support.

If insurance premium finance isn’t the right fit for your business, we have a range of business loans and asset finance options worth exploring.