Trade Credit Insurance

Can your company survive if a customer fails to pay on time or at all? Bad debts can easily sink your business and it’s a risk faced by every company. We’re all used to paying out for insurance to cover commercial property or stock, but we’re not all as proactive when it comes to managing the risk of bad debt. Luckily, you can manage it effectively for less than you might think with trade credit insurance.

What is trade credit insurance?

Trade credit insurance is an insurance policy that will pay out if one of your customers fails to pay their bills. It can cover both goods and services that have been supplied.

Who needs it?

All businesses that trade on credit terms will benefit from this insurance. However, it’s particularly important for certain businesses. For example, if:

You have one or two key clients that make up a significant portion of your turnover.
You’re dealing with businesses around the world and it’s harder to get an accurate view of their financial security.
Your business has limited assets to turn to if there is a problem with cash-flow.

Every day in the UK, trade credit insurers help over 50 businesses. In uncertain times, companies can collapse overnight, creating a domino effect on suppliers.

Benefits that help your business to grow

Your bills will be paid and your cash flow will be protected.
As well as peace of mind, it also gives you the confidence to extend credit to new customers, which will help your business to grow.
It can make it easier to access additional funds because it gives banks more confidence in your business.
It reassures other businesses in your supply chain, which will know your company is effectively managing risk. That can mean more or bigger orders.

Covering two types of risk

Trade credit insurance is designed to cover two types of risk that your business faces:

Commercial risk.
Political risk.

Commercial risk means the risk to your business if your customers do not pay their bills due to declared financial difficulty. This could be a failure to pay completely or failure to pay within the terms of the invoice.

Political risk means the risk to your business if your business is not paid because of something outside of your customer’s control. For example, this could be as a result of political unrest or war. It could also be because of a natural disaster, like a hurricane or flooding.

Matching your business needs

Cover all your customers or individual accounts.
Choose to cover the commercial risk, political risk, or both.
Policies designed to protect SMEs and larger organisations.
For companies trading in the UK or internationally.