Trade Credit Insurance

Trade credit insurance is designed to provide protection to businesses against potential losses incurred in connection with their accounts receivable. Businesses that sell goods or services on credit face credit risk due to the buyer's potential inability to pay because of causes such as insolvency or default.

Trade credit insurance can help both the buyer and the seller in a transaction by making the buyer more attractive to the seller and by providing some financial security to the seller. Potential buyers that present a larger credit risk, such businesses that are new, located in emerging markets, or that may be experiencing financial difficulties, can benefit by having trade credit insurance reduce their associated credit risk. Trade credit insurance can benefit sellers by providing more stable earnings, lowering bad debt reserves and by helping sellers expand their customer base domestically and internationally.

How do I know if my organization needs trade credit insurance?

The following questions should be asked to see who can benefit from purchasing trade credit insurance:

• What would be the impact on your balance sheet if your largest customer files for bankruptcy?
• Would you like to expand into new markets or acquire new customers without increasing your credit risk?
• Are you aware of the financial condition of your largest customers?
• What would be the financial impact on your organization if you have to write off bad debts?
• Would you like to reduce your balance sheet risk?

Trade credit insurance can be tailored to protect all accounts receivable within a business, a specific customer, or a specific segment or market within a business. Give us a call to discuss your trade credit insurance needs.