Trade Credit insurance

Trade credit insurance, also known as debtor insurance or credit insurance, covers the risk of bad debt where a customer is unable to pay for goods or services that have been provided on credit terms, subject to relevant policy conditions being met. The policy guarantees that insured debts will be paid even if a customer becomes insolvent or fails to pay within extended timeframes.  

Credit risk insurance is for any business that trades on credit terms. If you provide goods or services with deferred payment (typically 30-120 days), you're exposed to non-payment risk. It's particularly valuable in sectors with higher insolvency rates like construction, manufacturing, recruitment, and wholesale distribution. 

The information on every company will change during a 12-month period and insurers will continually review all information, as would uninsured companies. Insured credit limits may decrease or increase in light of this information and any goods or services provided with Credit insurance in place remain insured until those goods or services have been paid for. Where goods and services were covered, credit cover can never be taken away, only future orders will not be covered.

Our clients are often surprised at how much cover is available across their entire debtor book. Many companies then use credit insurance to increase sales – offering higher levels of credit to their customers with the confidence that comes from knowing the credit risk is insured.

Any company can get into financial difficulty and any company can become insolvent. Some companies are better credit risks than others and the price of Credit insurance can reflect the risk on your debtor ledger.

Credit insurance provides cover for risks going forwards and there is always the risk of a bad debt. It is good practice to understand the potential risk of a bad debt and to consider insurance before a bad debt occurs.

Credit insurance is a highly cost-effective way to replace a bad debt reserve and to free up cash that can be put to much better use in your business.

Invoice finance of any type is a funding solution which may or may not include Credit insurance (or Debtor Protection). Debtor Protection linked to invoice finance may or may not be the most suitable or cost effective way to manage your own company’s trade credit risk. Our team will advise on alternatives so you can make an informed decision.

As soon as you know your customer has become insolvent or is unable to pay, you should contact our experienced trade credit team who will see you through the claims process. You will typically receive 90% of the value of insured debt. Claims will usually be settled within 30 – 60 days of the claim and supporting documents being submitted depending on the value / complexity of the claim.

In general terms, a Credit insurance policy insures the risk of non-payment – ‘picking up the bill’ if the buyer can’t/won’t pay. T&C’s apply.

No, you don’t have to insure all of your customers. When you work with our trade credit team, they will look to provide you with exactly the cover you want. That may be individual contracts, individual customers, a selection of customers or all of your customers.

The price is dependent on a variety of factors, including the nature of your business, the quality of your credit management processes, and the strength of your customers. Get in touch with our team for a quote; we are sure our price will not be beaten for the quality of cover we arrange.

Trade Credit insurance is a niche product that requires careful risk assessment. It is therefore important to work with an insurance broker who has the knowledge and capabilities in Trade Credit insurance to ensure your business has the appropriate cover in place.