What is Trade Credit Insurance?

Trade Credit Insurance helps protect your business against unforeseen occurrences that may threated your business against losses from non-payment of a commercial trade debt. It is available for businesses of all sizes, from SME to large corporates across any sector that supplied goods or services on credit terms. Policies are flexible allow the policyholder to cover the entire portfolio or just the key accounts.

Insurers’ proximity to the market, their relationship with customers and their access to proprietary information and market intelligence help them to detect potential insolvencies before they are filed.

Even secure business environments can be influenced by the growing uncertainty of external factors. This can cause unexpected bad debts from previously very stable businesses. A credit insurance policy gives the policyholder access to an extensive information network, which acts as an effective early warning mechanism for adverse customer trends

Bad debts affect short-term cash flow and long-term profitability. Applying long-term strategies to protect short-term risks helps ensure that cash flow remains positive, even in the face of catastrophic loss events.

Key Features of Trade Credit Insurance:

Protection against non-payment. Should a customer be unable to pay their debts due to insolvency or protracted default, trade credit insurance will pay out a percentage of the outstanding amount owed (typically around 90%).
Reduce bad debt reserves. Trade credit helps free up capital for the business to use elsewhere.
Cash flow relief. Trade credit insurance provides cash flow relief when a business’ customers become insolvent or do not pay their bills on time Losses can be indemnified, allowing the business to maintain its cash flow.
In-depth knowledge. Insurers provide businesses with extensive knowledge on their customers, sector and economic trends.
Portfolio monitoring. Access to professional portfolio monitors is provided, who track customer’s ability to meet their financial obligations to the insured business.
Access to new markets. Businesses are protected against the risks of exporting overseas, reducing the uncertainty that comes with these practices.
Accounts receivable support. Businesses are offered access to professional Trade Credit analysts who can share best practices with a company’s credit department.
Collection services. Access to cost-effective third-party collection services can be provided.
Facilitation of bank financing. Banks will typically offer more favourable lending terms to businesses that insure their accounts receivable.

For any further information on trade credit insurance policies, contact Maggie Brotherson today.
T: +44 7497 199978
E: maggie.brotherson@konsileo.com

Maggie Brotherson – Trade Credit Specialist

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