Trade Credit Insurance Demystified: Why Your Competitor Uses Trade Credit Insurance

/ By Cowan Insurance Group

Imagine a scenario where your clients are unable to settle their debts. This situation of credit losses isn't just a threat to your business; it's also a looming danger for your competitors. It's a universal challenge that every company must navigate.

Trade Credit Insurance, also known as credit insurance, export credit insurance, or buyer bankruptcy insurance, transfers up to 90% of the risk for businesses seeking to protect their accounts receivable revenue from non-payment risk. Not sure if Trade Credit is right for you? Let's look at the benefits of insuring accounts receivables using this product.

Grow your sales

Trade Credit Insurance isn't just a safety net—it's a platform for growth. Business with Trade Credit Insurance can boost their sales with existing accounts by offering clients more favourable credit terms, making decisions with the confidence that the credit exposure can be insurable.

For businesses eyeing expansion into new markets or seeking to increase their sales volume, Trade Credit Insurance can help companies boost sales, venture into uncharted markets, and acquire new clientele. By shielding against political and commercial uncertainties, Trade Credit insurers take on non-payment risk—especially critical when signing new clients, expanding into new markets, or extending credit terms to a novel client in an existing or new market. Your competition knows about Trade Credit insurance and likely uses it when they grow their sales.

Cash flow relief

Efficient cash flow management is the mainstay of every successful business operation. Trade Credit enables businesses to prevent disruption to cash flow.

Trade Credit Insurance provides cash flow relief when a business's client does not pay their bills on time or becomes insolvent, fostering stability and resilience. Losses can be indemnified, allowing the company to maintain its cash flow.

Get the protection you need for your business.

More capital

Access to financing is a cornerstone of business growth. Yet, traditional lenders often shy away from extending credit to companies operating in volatile or high-risk industries. Trade Credit can help bridge this gap by enhancing the creditworthiness of businesses in the eyes of lenders. Banks typically offer more favourable lending terms for companies that insure their accounts receivable.

With the assurance of protection against credit risks, companies can negotiate more favourable lending terms and secure the financing they need to fuel their expansion plans. This, in turn, facilitates investment in innovation, infrastructure, and human capital, driving long-term growth and competitiveness.

Overdue collection services

Trade Credit Insurance is not just about protecting your business from losses due to unpaid debts. It also offers access to a valuable service through overdue collection services. These services are often more cost-effective than recovering the debts alone, saving you time and resources.

Choosing the right broker partner

When choosing a Trade Credit broker, choose a reliable and effective intermediary:

  • Expertise and experience. Look for a broker with extensive knowledge and expertise in Trade Credit. They should deeply understand the industry, market dynamics, and various insurance products available. Experience matters when navigating the complexities of Trade Credit Insurance and tailoring solutions to meet your specific needs.
  • Reputation and track record. Research the broker's industry reputation and evaluate their success track record. Client testimonials, case studies, and industry awards can provide valuable insights into their reliability, professionalism, and ability to deliver results. A broker with a strong reputation is likelier to provide quality service and support throughout the insurance process.
  • Global reach and network. Consider the broker's global reach and network of insurers. A broker with access to a wide range of insurance providers and international markets can offer greater flexibility and options when designing your Trade Credit program. This is especially important if your business operates in multiple countries or deals with international trade partners.
  • Customized solutions. Seek a broker who takes the time to understand your business, industry, and specific risk exposures. They should be able to tailor Trade Credit solutions to align with your unique requirements and objectives. Customized solutions ensure you get the coverage you need to protect your business against potential credit risks.
  • Quality of service. Evaluate the broker's level of service and support throughout the insurance process. From the initial consultation to claims management, you want a responsive, proactive, committed broker to meet your needs. Clear communication, timely updates, and proactive risk management advice are hallmarks of excellent service.

Why Cowan

  • The value of independence. As a Canadian-owned, privately-held brokerage, we remain independent and accountable solely to our clients, without direct or indirect interests with an insurance company or equity firm. We work with your best interests in mind. We also focus on long-term profitable growth, professional relationships with our carrier partners, and relationships built on credibility.
  • Experience on your side. With over 60 years of combined experience, the Cowan Trade Credit Team deeply understands Trade Credit and the unique challenges companies face in managing credit risks and growing their business, empowering clients to achieve long-term business objectives and confidently mitigate credit risks.
  • A national client base. Our team of account executives meets our clients where they do business in Canada and has strong relationships with leading trade carriers licensed in Canada and nationally with global Trade Credit teams. We deliver client service backed by industry knowledge, carrier partnerships, and national experience in many key business segments, giving us unique insight into the risks, challenges, and opportunities many companies face today. For our clients, this means increased value in terms of sustainable pricing, attractive coverage terms, and dependable claims experiences.

Contact a Cowan Insurance Group Trade Credit specialist to learn more about how Trade Credit insurance can protect your business.

In the next Trade Credit Insight blog: Meet Jason Roberts and discover why you are important to a Cowan broker. 


The Latest Posts

Looking to Achieve a Heart-Healthy Workplace? Here’s What You Can Do.

Looking to Achieve a Heart-Healthy Workplace? Here’s What You Can Do.

Eating a healthy, balanced diet is one of the most important things you can do to protect your health. In fact, up to 80% of premature heart disease and […]

Read more
Why Secure an Insurance Policy for Your Child or Grandchild?

Why Secure an Insurance Policy for Your Child or Grandchild?

Insurance policies are typically viewed as a safeguard against the loss of income due to illness or death; however, the perspective shifts when it comes […]

Read more
Spotlight on Carolyn Nephew: Navigating Trade Credit Solutions with Expertise

Spotlight on Carolyn Nephew: Navigating Trade Credit Solutions with Expertise

With a distinguished career spanning executive and underwriting positions at Export Development Canada and Allianz Trade Canada, Carolyn Nephew, the […]

Read more