This comprehensive guide on Trade Credit Insurance explains the basics of protecting your business, as well as pricing and how to apply.
This number should be particularly concerning if you own a business. A customer who fails to pay for large purchases could put you in serious financial trouble.
Trade credit insurance is a way to prevent this from happening. You can also protect yourself against financial problems caused by customers. This Accounts Receivable Insurance overview will show you how to apply, pricing, as well as benefits. You can download our Terminology guide below to learn more about Accounts Receivable Insurance terminology.
What’s Trade Credit Insurance?
Trade credit insurance, a type of insurance that protects business owners from bad debts, is a special kind of insurance. Your business can be protected against loss if one of your customers defaults on a payment.
How does Trade Credit Insurance work?
Trade credit insurance protects your cash flow. If you fulfill an obligation for a client, and the business is unable or unwilling to pay you, your company will still be paid most of what they owe. Trade credit insurance will protect you against any default in payment due to client default, bankruptcy, or other political risks.
Who has Trade Credit Insurance Needs?
Simply put, trade credit insurance is beneficial for businesses of any size.
Large Business
Uncertainties or problems in a region or market can impact a large business. Supply chains can be disrupted. Political unrest can affect trade routes or partner businesses. What happens if you’re experiencing growth and investing in expansion, and need to protect your current positions? Trade credit insurance can protect all these situations and more.
Small Business
Some people believe that because your business is small, you don’t need trade credit coverage. It’s impossible to believe that this is true. A small business can be particularly affected by a client who fails to pay.
What Trade Credit Insurance Benefits You?
Trade credit insurance is a benefit to both your company and you. Trade credit insurance usually comes with additional features. This includes the ability to cover customer unpaid debts. While this guide has only touched the surface, there are more benefits than we can list. These include the ability to leverage insurance for additional credit lines and increased operating capital. To learn more about how credit insurance could benefit your company, please contact your lender or our experts.
Potential Problems
Niche Trade Credit monitors the creditworthiness of all your customers. This service allows you to evaluate a company, track customers, and calculate the probability that a particular customer will pay if credit is extended. This can be a tremendous help in identifying customers that are most likely to default.
Niche Trade Credit Insurance can help you manage your portfolio. Find out more about these services.
Client Acquisition is less risky
Trade credit insurance policies can be a great way to help your company grow. You might have recently received a request to produce a large order on credit. This risk is too high to take on if your organization does not have trade-credit insurance. Trade credit insurance can help you take on the risk and open new doors for a large client.
Increase Your Business
Trade credit insurance will not only help you extend credit to customers in a stress-free manner, but also allow you to expand your business into countries where there is a high-risk investment. Trade credit insurance plans often include reporting options that allow you to research new markets as well as the risks involved in entering these markets. You can find more information about international trade conditions in our global Risk Map.
Competitiveness
Small businesses may feel like it is hard to be competitive with larger firms in their market. Trade credit insurance is a great way to take your business to the next level. This insurance can help you accept more risk from new and different clients by allowing you to offer credit without any worries. This will help your business grow and make you more competitive in the market.
You Do Not Need to Stress About Collecting Debt
Many business owners find that collecting debts is one of their most stressful tasks when extending credit to customers. Niche Trade Credit offers trade credit insurance policies that will help you collect debts. Get free debt collection services with all our policies.
