Trade Credit Insurance

Why Do Companies Buy Credit Risk Insurance?

Risk Mitigation

• Protects against the risk of a customer on credit term sales up to 365 days
• Mitigates concentration risk when a large portion of a company’s sales are directed to one or a few customers
• Provides valuable credit information on unknown buyers

Financing and Securing

• Facilitates attractive bank financing
• Allows access to additional capital by margining your Accounts Receivable and Inventory
• Supports Letters of Credit (L/C’s) on applicable transactions with additional security
• Provides enhanced security when Factoring Accounts Receivables

Credit Enhancement

• Supports a company’s accounts receivable management and validates credit protocols
• Provides an insured credit limit for a customer and monitors portfolio performance during the policy period
• Access to readily available to domestic and international credit reporting information

Increase Sales

• Increase sales to new and existing customers
• Increases export sales by establishing new foreign markets
• Provides a competitive advantage by having the ability to offer extending terms

Corporate Governance

• Cost of Insurance in most cases reduces your bad debt reserve for Private and Public companies
• Offers assistance to directors and officers by providing a second opinion on customer credit limit decisions and monitoring the customer portfolio
• Demonstrates prudent Credit practices for “would be” investors

 

No matter what your reason for using credit insurance, it provides the necessary coverage for all stakeholders and shareholders to maintain a stable business environment. With that being said, this product is sometimes referred to as “Sleep Insurance”, as you can rest assured you have secured sometimes your largest asset.