Trade credit insurance provides cover for businesses if a customer that owes money for products and services does not pay their debts, or pays them later than the payment terms dictate. This insurance protects businesses against commercial risks that are beyond their control and minimises the financial implications of sudden or unexpected customer insolvency.
Why have credit insurance?
An estimated total of 5,564 companies entered insolvency during Q4 2016 with many of them leaving their suppliers with significant unsatisfied debts. If your business is trading with a customer that is suddenly unable to pay their credit debts, the financial impact could be detrimental to your business. Credit Insurance is a valuable financial instrument that supports the risk management strategy mitigating any losses that should arise.
Additionally, experts predict that global growth could potentially slow this year to +2.4% and might accelerate marginally in 2017 (+2.7%). The slowdown in prices has pushed down nominal growth, turnovers, and trade both domestically and abroad. This priceless growth is set to cause a rise in insolvencies by +1% this year and in 2017.
What are the benefits?
- Credit insurance can help businesses become more profitable by protecting against the risk of customer insolvencies.
- Enables suppliers to retain good working relationships with customers.
- Provides a better cash flow and, in turn, improves relationships with banks, as they are reassured when providing finance.
- Supports business growth by giving businesses the confidence to work with new customers or expand into new markets.
- Suppliers secure themselves a competitive edge in the market through on-going access to customer insight and having the ability to offer open credit to customers.
 Euler Hermes