Also known as trade credit insurance coverage, business credit insurance coverage protects companies from non-payment of commercial debt. When your organization has business credit insurance, you have assurance that you’re financially covered against commercial risks of trade that are beyond your control.
Business credit insurance ensures that your earnings are secure, that cash flows are maintained, that your capital is protected, and that loan servicing and repayments are covered. Business credit insurance can be the right investment for many organizations that work with credit lines and accounts receivable.
A business credit insurance policy enables organizations to feel more secure in extending credit to current customers or to pursue larger customers that may otherwise seem high risk. The protection such a policy offers enables a company to increase sales to grow their business with current customers. Insured businesses can sell on open account terms where they might have previously been able to sell only on a secured basis. This can be a huge competitive advantage for exporters.
It’s also crucial to understand that business credit insurance is not a substitute for thoughtful and prudent credit management. Sound credit management practices are the foundation of any credit insurance partnership and policy. Business credit insurance goes beyond indemnification and doesn’t replace the credit practices of a business.
Benefits of business credit insurance coverage
Trade credit is important for many companies to succeed, but it can also weigh on cash flow and working capital. Trade credit insurance can help you control this credit risk as part of your cash flow management strategy. With business credit insurance, you can be sure that you are compensated for non-repayment of debt. Business credit insurance also guarantees your ability to manage your investments and operations efficiently and to help stimulate growth.