Trade Credit Insurance Explained

/ By Cowan Insurance Group

Your business’s accounts receivable portfolios are built on trust, as a client promises to pay for a product at a future date in exchange for a product delivered today. Just one late payment or customer insolvency can stress your cash flow and profitability. Despite potentially representing up to 40% or more of a business’s asset base, many companies fail to insure their accounts receivable portfolios.

Having the right Trade Credit insurance—also known as Accounts Receivable Insurance—can support the business you’ve built by protecting your assets against unexpected disruptions. In addition to political risk when selling to foreign markets, this type of insurance can also help safeguard accounts receivable against non-payment.

Trade Credit insurance explained

  • Cash flow enhancement—Insured losses can be indemnified in the event of bankruptcy within 30 days of claims submission
  • Improved bank margining—Bank margining against your accounts receivable assets can often be increased from 75% to 90% through credit enhancing with an insurance policy
  • Support concentration risk—Mitigates risks for businesses dependent on a select number of customers
  • Accounts receivable support—Offers access to professional Trade Credit analysts with buyer, industry, and country intelligence
  • Improved sales—Boosts sales opportunities by offering clients and prospects more favourable credit terms while potentially eliminating the need for costly letters of credit
  • Access to new markets—Supports business growth with the market knowledge needed to make informed foreign market decisions
  • Portfolio screening and monitoring—Insurers will screen, qualify, and monitor prospective and existing clients within an insured portfolio, tracking customers’ ability to meet financial obligations to the insured business
  • Peace of mind—Gives comfort that your business will not be negatively affected by another business’s bad decisions

A proud member of the International Credit Brokers Alliance (ICBA), we have access to all Trade Credit insurers in the Canadian market and offer a broad global Trade Credit insurance reach and local market support.

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