What is Credit Insurance?

Credit insurance safeguards you against the failure of your customers to pay their trade credit debts.

It’s an investment that protects you in the event of a bad debt, and more importantly, helps you avoid bad debt in the first place. Trade credit insurance is predictive protection backed by data science that takes the guesswork out of your credit process, enabling you to safely grow your business.

It is an insurance policy against the risk of non-payment of trade receivables (commercial and political risks). Trade receivables are goods or services despatched on short term credit.

Credit insurance covers the risk of non-payment when a business offers trade credit to a customer. It is an essential risk management tool, that enables companies of all sizes to trade with confidence at home or abroad.

A full credit management solution service provides access to all proprietary credit information via a on-line information system, available 24 hours a day, 365 days a year – to help you grow your business.

We have a panel of credit insurance companies which we can access giving you a credit insurance comparison.

Insurance policies can include three services

• Information
• Protection
• Collection

Trade credit insurance gives you the confidence to trade and get paid. Businesses use trade credit to manage and improve cash- flow. It simply means that as a supplier you can extend the usual 30-day business credit terms, giving your customer extra time to pay for the goods or services provided. It matters because many sources confirm that trade credit is the second largest source of finance for small businesses.

The problem is that businesses negotiate trade credit terms based on the customer’s perceived credit worthiness, but a supplier is often the last to know when a business is in financial difficulty.

Companies fail for a variety of reasons, from a change in their environment or management mistakes to suffering a devastating bad debt. Ultimately, lack of cash-flow causes businesses to become insolvent.

Businesses use trade credit to manage and improve cash-flow. It matters because many sources confirm that trade credit is the second largest source of finance for businesses. The problem is that businesses negotiate trade credit terms based on the customer’s perceived creditworthiness, but a supplier is often the last to know when a business is in financial difficulty. Companies fail for a variety of reasons, from a change in their environment or management mistakes to suffering a devastating bad debt. Ultimately, lack of cash-flow causes businesses to become insolvent.

The challenge is to effectively futureproof the credit strategy for your business and manage risks that seem so impossible to predict. The key being “information”. Knowledge is the bedrock of sound trade and never before has this been more pertinent. In the current climate, you cannot rely on old information. Constant monitoring, analysis and live updates can be the difference between making a successful credit decision or one that is destined for failure.

Credit Insurance is as a risk management tool that will work with a business, helping to avoid risks, reduce bad debt and hopefully improving cashflow. I want this to be used to grow a business with confidence, offering existing customers credit for the first time or increasing the current credit limit offered, and even with new customers in potentially new markets.

It’s not enough to credit check a potential new customer; you need the inside track on their financial affairs, trading strategy, payment behaviour and even an insight on their approach to risk management and whether there is a contingency plan should they hit troubled waters. In today’s trading environment, businesses are hungry for this level of detail but often don’t have the resource required to continually review and update what has become the essential inside track.

Credit insurance affords all that. Access to the right information alongside cutting-edge tools, real-time insights, unrivalled expertise and decades of experience enabling customers to make the right business decisions and grow with confidence.

Businesses who want to grow and expand there business whilst having the credit protection to trade freely with customers. Business with as little as £200,000 turnover benefit from having the credit insurance in place. All the way through to large SME businesses.