What Is Credit Insurance?

Business credit insurance covers a company’s accounts receivable, which typically represent more than 40% of a company’s assets. This protection insures against unexpected bad debt losses outside of the insured’s control due to commercial and/or political risks, such as insolvencies, protracted default, repudiation, acts of war and government regulation or restrictions. Commercial Risk

    • Insolvency– Includes court protection such as Chapter 11 in the U.S. or Companies’ Creditors Arrangement Act in Canada
    • Protracted Default– Unpaid invoices 90 days past due date
    • Repudiation– Refusal to take up goods shipped and delivered as per contract

Political Risk

    • Inconvertibility
    • Contract frustration as a result of government action
    • Public Buyer Default
    • Act of war (other than wars between the five super powers: China, France, Great Britain, Russia and the United States)
    • Government regulation or restrictions

Why Insure Accounts Receivable?

Accounts receivable are often a company’s only uninsured asset, yet they are one of the most vulnerable to loss and are more likely to be affected by business cycles.  They provide the cash flow – the lifeblood – for a business and usually represent the highest cost to maintain (funded through bank borrowings and cost of delinquencies).

Benefits of Credit Insurance

        • Reduce your credit risk and improve financial planning by:
          • Strengthening your balance sheet to avoid unexpected losses
          • Securing your company’s cash flow by reducing bad debt
          • Forecasting bad debts more accurately through buyer monitoring
          • Using credit insurance in conjunction with your risk management practices
        • Safely expand sales, both domestically and abroad
        • Allows your company to compete and extend credit
        • Gives a business the ability to extend credit higher than bank lending, and it is insured
        • Protection from profit erosion from late payments and bad debt losses from buyers who are unable to pay
        • Supports credit management practices
        • Enhances financing while reducing the costs of borrowing
        • Taps into the extensive international risk database for over 160 countries backed by knowledgeable underwriters
        • Covers any work-in-progress to protect against the insolvency of a buyer for which you produce customized goods

Connect With Us

If you have any questions about how credit insurance can help, please let us know!

TRADE RISK GROUP

305 Floral Vale Boulevard
Yardley, PA 19067

Phone: 215.860.1900  |  Email: trgadmin@traderiskgroup.com

 

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