Trade credit insurance protects your business against both commercial and political risks that
are beyond your control. It improves the quality of your bottom line and helps you to grow
profitably, minimizing the risk of sudden or unexpected customer insolvency. Credit insurance
gives you the confidence to extend credit to new customers and also improves access to funding,
often at more competitive rates. Trade credit insurance is for short-term account receivables i.e.
those due within 12 months.
How does credit insurance work?
Credit insurance protects your company against the failure of your customers to pay their trade
credit debts owed to you. These debts can arise as a result of a customer becoming insolvent or
failing to pay within agreed terms and conditions (i.e. “protracted default”).
How it works is simple: Insurers’ network of risk offices monitors the financial performance and
well-being of your customers. We allocate each of those customers a grade that reflects the
health of their activity and the way they conduct business.
Based on this risk assessment, each of your buyers is then granted a specific credit limit up to
which you, the insured, can trade and be able to claim should something go wrong. This limit can
be revised upward or downward as new information becomes available.
The 4 reasons why credit insurance improves the profitability of your business
Trade receivables can represent up to a third of the total assets on a company’s balance sheet.
Managing your trade receivables effectively therefore plays a key role in:
- Delivering comprehensive protection against the risk of insolvency
- Enhancing your customer relationships
- Improving banking relationships and access to finance
- Supporting sales expansion
Credit Insurance Example
If your company’s profit margin is 5% and one of your buyers defaults on a debt of $100,000,
then you will have to produce additional sales worth $2,000,000 to make up for lost profits.
Non-payments weaken your company and lower its investment capacity. A credit insurance
policy helps manage your account receivables and mitigate your losses in the event of nonpayment.
We tailor our credit insurance solutions to your company’s size, sector and business needs.
Discover more about our credit insurance solutions for small-medium enterprises (SMEs),
large-sized business and multinationals
For Small companies
Simple, affordable and easy to implement trade-related insurance solutions that enable you to
safely develop your business.
Medium & large companies
Flexible trade-related insurance solutions to fit your sector, site and business ambitions
domestically and abroad.
Multinationals
Secure your worldwide trade receivables with our tailored and centralized global solution to
support your business strategy wherever you trade.
Last modified: November 13, 2023
