Businesses today are expected to, and benefit from offering credit to their customers. Extending credit gives your customers more purchasing power, allowing for your business to take advantage of sales opportunities that may not have been otherwise possible. However, offering credit opens up your business to the risk of increased financial stress if customers are late on payments or default on those payments.
Trade credit insurance—also known as credit insurance or export credit insurance—is an insurance product and risk management strategy that protects an organization’s account receivables against nonpayment. Your trade credit insurance provider will assess the stability of the customers you’re looking to insure. Each customer will be assigned a credit limit which is the maximum the provider will indemnify if the customer fails to pay. Your business can insure individual, select, or all of your customer accounts depending on your needs. Trade credit insurance can protect your business’s accounts receivables from:
- non-payment or late payment
- customer bankruptcy, insolvency or similar legal status
- non-payment following an event outside the control of the buyer or seller including political events
The goal of a trade credit insurance policy is not only to indemnify losses, but to help your business prevent foreseeable losses in the first place. To achieve this, trade credit insurers offer services to help improve your credit management practices. These services include:
- proactive monitoring of your business’s customers to ensure creditworthiness
- country reports that detail the potential risk of conducting business in foreign markets
- manage outstanding receivables
- proactive debt collection procedures
When you apply for trade credit insurance, you are assigned a credit insurance broker who becomes your broker of record. Your broker will help you manage your payment risk by cross-shopping insurance providers to ensure your business is able to leverage the most it can to maximize sales and operating opportunities while responsibly managing your risk and capital.
For more information, click on the Request For More Information button below or contact our office to speak with on of our trade credit specialists.
- become your Broker of Record
- protect your accounts receivable
- strengthen your marketing and sales efforts
- increase your working capital to fuel growth and expansion
- risk management services