trade credit insurance

How Trade Credit Insurance helps businesses to offer credit and secure new contracts

Trade Credit Insurance provides cover for businesses if customers who owe money for goods or services unexpectedly fail to pay due to their own financial struggles. It provides businesses with the confidence to continue to offer credit to new customers and gives them access to funding, often at competitive rates.

This type of credit insurance is also helpful to give confidence when a client makes a decision to double their order. In order for a business to fulfil that order they will need to buy more resources, pay more staff and work overtime, which all means an upfront investment. Although the client has always been a good payer there is still a risk of their order being cancelled part way through or their cash resources not being sufficient after all.

When taking on a new client, although it is a very exciting time, it can initially be a leap of faith in that once they receive the goods, they will pay the invoice.

Trade Credit Insurance reduces non-payment risk and enables businesses to feel confident in growing their business.

Benefits of trade credit insurance

Trade Credit Insurance gives the policyholder access to information that provides an early warning mechanism for their customers’ financial problems. The credit insurance provider will inform the business of any changes that might impact the financial health of their customers and their ability to pay for goods or services delivered. They will then come up with a plan to mitigate risk and impact for the policyholder.

Trade Credit Insurance reduces risks which are out of your control, lets you offer credit to new customers, ensures that you can continue to pay your own suppliers for goods and services and improves access to funds at competitive rates.

It is also a great way to boost sales by offering new customers favourable credit terms to entice them to buy from you over your competitors.

How Trade Credit Insurance Works

  1. The policyholder provides goods to customers on 30 days payment terms.
  2. The customer gets into financial difficulty.
  3. The credit insurance company monitor their policyholder’s customers and alerts their policy holder of impending financial crisis.
  4. Customer becomes insolvent and therefore can’t pay the policyholder.
  5. The policyholder is able to claim on its insurance policy.
  6. The policyholder can continue trading and is prevented from having significant bad debts, so will be able to continue to pay its own suppliers.

Get in Touch

Trade credit insurance can be a valuable asset to businesses. With the right policy in place, businesses have greater confidence in extending credit terms while reducing their risk of non-payment.

If you’re interested in finding out more about our credit insurance policies or getting a quote, don’t hesitate to contact us at 01905 21681.