Introduction to Trade Credit Insurance
Trade credit insurance protects your accounts receivable against the risk of non-payment due to insolvency or protracted default, while giving your business the insight and confidence to grow revenues with new and existing business customers.
Acting as an early warning system for potential payment issues, trade credit insurance allows you to trade safely with new customers, trade more with existing customers and expand to new sectors or export markets.
We start by assessing the creditworthiness and financial stability of your customers, in order for us to underwrite safe credit limits on them, with risk coverage up to the agreed limit.
We provide regular updates on those trading limits, adjusting them based on changing conditions. And we support your business growth by repeating this process for new customers.
In the event you tell us about a non-payment for an insured customer, we investigate, and if policy terms are met, we indemnify you for the insured amount.
Questions on coverage
Evaluating the on-going risk of non-payment requires a significant amount of effort and expertise in obtaining and evaluating the latest financial information, that’s not always publicly available. Which is where we and Trade Credit Insurance come in.
Benefits of credit insurance
Trade debts can make up to 40% or more of business assets, and even one of your customers failing to pay can often have a big impact on your cash flow and working capital.
If, for example, you have a 5% profit margin and suffer a £100,000 debt, you’ll need to win additional sales of £2 million to make up for the lost profits.
Bad debts can also reduce your ability to invest in your business, and mean you incur interest on borrowings you may need to counteract losses.
The cost and obtaining cover
It’s calculated for your business and the way you trade and is based on a percentage of your sales, generally a fraction of 1%. So, if your sales were £2 million last year and you wanted to cover that entire amount, the premium would usually be less than £10,000. But remember, premiums can go up or down from year to year.
Getting a price indication with us online is quick and easy for you to in a matter of minutes on our website: Trade credit insurance price calculator.
More in-depth questions
Trade credit insurance and factoring can work hand-in-hand, for example by insuring a factor’s portfolio. You can find out more about factoring in our article on invoice finance.
Choose solutions based on your company size
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Trade Credit Insurance for small businesses
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Trade Credit Insurance for medium and large businesses
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