Benefits of Trade Credit Insurance

Trade credit insurance is suitable for all types of businesses, whether they are trading nationally or internationally, and for a variety of sectors from manufacturing to services. In terms of size, the benefits can apply to micro SMEs, right through to the largest multinationals. 

While protection against non-payment is often perceived as the main reason to purchase trade credit insurance, there are also a number of other benefits to businesses taking out trade credit insurance: 

Expanding sales 

Trade credit insurance helps businesses to safely sell more to existing customers or expand to new customers, that may otherwise have been deemed too risky, knowing they are insured should the customer not pay their debts. 

Helping expansion into new international markets 

Trade credit insurance helps protect businesses against the risks of exporting overseas, reducing uncertainty for firms. 

Obtaining better finance terms 

Banks will typically lend more capital to businesses who have trade credit insurance in place. 

Gaining in-depth knowledge of the marketplace 

Trade credit insurers provide businesses with extensive knowledge of companies, sectors and economic trends to help them grow safely. 

Reducing bad-debt reserves 

Trade credit insurance helps free up capital for the business to use elsewhere. In addition, trade credit insurance premiums are tax deductible, unlike bad-debt reserves where a business simply sets aside money in case a debt is not recoverable. 

Protecting against non-payment 

Should a customer be unable to pay its debts due to insolvency or protracted default, trade credit insurance will pay out a percentage of the outstanding amount owed (typically around 90%).