In 2021, FinCred was approached for by a Kent based business in the construction sector, seeking trade credit insurance to provide protection for their invoice finance facility and to support growth. The business had struggled to find acceptable levels of coverage for the customers. At that time, it had a forecast turnover of £12 million.

Trade credit accounts for almost half of all B2B trade in the UK. However, it is common for many of these companies to operate without a comprehensive credit management strategy. Trade credit insurance is a vital part of the credit control toolkit.

Whether a customer is unable to pay an invoice under the terms of your contract, or has fallen into insolvency, trade credit insurance provides cover for your business and indemnifies your losses.

How It Works

The trade credit insurance market is multifaceted and intricate. The UK alone is home to numerous providers that offer a variety of different trade credit policies, each with their own strengths. From single invoice insurance to policies that cover your whole turnover, excess of loss policies to multinational trade credit insurance.

In most cases, it is advisable to appoint a specialist to approach the market on your behalf. Trade credit brokers utilise specialist tools and expertise to negotiate and secure a policy that works for your unique trading situation, acting in your best interest and providing guidance every step of the way by:

• Assessing Your Customers – Your broker works in conjunction with their network of insurance providers, performing a full credit health check on your customers and ensuring their financial stability and credit worthiness.
• Calculating Your Limits – Once the financial health of your customers has been assessed, their credit limits are calculated. Your business is provided with a breakdown of these amounts. Credit limits account for how much you will be indemnified by if the customer fails to pay you.
• Keeping You Updated – Your broker works with you through the lifetime of your policy. Certain credit limits may be increased, facilitating higher levels of trade. In some cases, they may be lowered as economic conditions shift and circumstances change. You are kept informed of any adjustments to your policy.
• Helping to Grow Your Business – As you explore new trade partners and prospects, your broker can work with you to assess their credit worthiness.
• Making a Claim – In the event one of your customers fails to pay an invoice, or stops trading due to insolvency, your trade credit insurance broker investigates the claim. If the terms of your policy have been met, they assist with your indemnification.

Types Of Trade Credit Insurance

Every business is unique. Experienced brokers are able to provide bespoke trade credit insurance solutions that meet your requirements, whether you’re a startup, small/medium-sized enterprise, or an established multinational.

Regardless of which sector you operate in, there are a wide variety of policies available to help boost your trade:

• Whole Turnover Insurance – Provides cover for your entire book of business against buyer insolvency and protracted default/non-payment for domestic and export buyers.
• Single Debtor Insurance – Covers your business against bad debts from a single customer.
• Named Buyer Insurance – A bespoke policy that secures you against the insolvency and protracted default of two or more specific customers.
• Export Insurance – Offers you comprehensive cover for trade outside your domestic country.
• Excess of Loss Policies – Works in conjunction with your internal credit control procedures. This policy protects your business against larger, potentially disastrous losses.
• Top-Up Insurance – Offers additional cover to boost a credit limit offered by another credit insurer.
• Single Invoice Insurance – Covers single or multiple invoices with one of your customers.
• SME Policies – Designed to provide cover for small/medium-sized enterprises.
• Multinational Trade Credit Insurance – Bespoke cover for businesses operating across two or more countries.
• Non-Cancellable Policies – Offers non-cancellable credit limits on customers/debtors/buyers for the duration of your policy.

Does Your Company Provide Goods/Services On Credit Terms?

After FinCred secured a bespoke trade credit insurance policy with the required levels of cover, the company that turned over £12 million went on to become one of the fastest growing businesses in Kent. They went on to secure higher levels of funding and boasted an annual turnover of £22 million within 2 years.

Trade credit insurance offers more than just financial protection. It provides the fuel you need to accelerate your business’ growth and profitability.

Contact us today to discuss how trade credit insurance can help you.