What is Trade Credit Insurance?
Does your company operate on credit terms when providing goods or services?
Credit terms are beneficial to facilitate trade, but it comes with a risk. If one of your customers defaults, or invoices go unpaid, the interruption to your cash flow can be devastating to your balance sheet, and hinder your growth as a business.
Trade credit insurance provides you with protection against the risk of debtor default due to insolvency or non-payment, giving you the confidence and peace of mind to trade on credit terms. You will have vital reassurance that even if your customers fail to pay their debts, your business will be indemnified.
Working With A Trade Credit Insurance Company
FinCred is an insurance broker that maximises its expertise, specialised tools, and relationships across the market to secure suitable policies with insurance companies for our clients.
When, with our expertise, you have bought a policy with a trade credit insurance company, we will continue to support and manage your policy. In the event that one of your debtors becomes insolvent or defaults, you will then be paid by the insurance company in accordance with the policy terms.
Types Of Trade Credit Insurance
Your business is unique, and so is your policy. Whether you’re a small UK startup, an established SME, or a multinational corporation, we provide bespoke trade credit insurance solutions that best meet your requirements.
The trade credit insurance market is varied and complex. There are specialised policies that focus on exports and those that focus on political risks, among many others.
However, no matter what sector you operate in, we provide the security you need to trade with confidence. We discuss your business’s unique needs, assess the areas of concern, and propose the best solutions to minimise these risks.
Single Debtor Insurance
Also known as single buyer, single risk or single customer insurance. This policy covers your business against bad debts from one single debtor up to a specified credit limit.
The insurance can be comprehensive, covering insolvency and protracted default or insolvency only. Underwriting criteria is more restrictive than whole turnover insurance policies.
Whole Turnover Insurance
Comprehensive trade credit insurance cover for a business’ entire ledger. The insurance covers against buyer insolvency and protracted default/non-payment for domestic and export buyers. Policy structures are usually “ground up” with a relatively small excess. Commercial indemnity is usually up to 90% of the credit limit.
Named Buyer Insurance
Also known as named customer insurance, key account insurance or selective policies. This policy provides cover for two or more specific debtors/buyers/customers on a comprehensive basis, i.e. for insolvency and protracted default.
Policy structure is bespoke depending on your requirements, you may wish to select specific buyers to insure, just your largest customers or customers with exposures above a certain threshold.
Export Insurance
This policy offers comprehensive cover, including political risks cover, for trade outside of your domestic country. You may wish to cover all of your export trade or export with specific countries only. The insurers will assess the risk associated with the country of trade amongst other factors.
Excess of Loss Policies
Policies designed for larger companies with significant turnover on a comprehensive basis where the business can accept a higher level of self-insurance. The internal credit control procedures within the business will need to be established/sophisticated.
These credit control procedures protect your business from smaller expected losses and the insurance policy covers your business for those extraordinary, potentially catastrophic losses. In exchange for a higher risk share, the premium rates are more competitive and cover on customers/buyers/debtors is often written on a non-cancellable basis.
Non-cancellable Policies
Policy which provides non-cancellable credit limits on customers/debtors/buyers for duration of the policy period. Usually offered on an excess of loss, single debtor or named buyer structure.
Top-Up Insurance
Additional layer of cover to top-up a credit limit offered by another credit insurer.
Multinational Trade Cover Insurance
Trade credit insurance for multinational companies operating across two or more countries. Generally targeted at global businesses with a large turnover. Bespoke risk solutions for global businesses with support at a global and local level.
SME Policies
Trade credit insurance policies targeted at SMEs. Policies provide set policy structures at set prices with small excesses, typically £500 to £1,000. If the SME meets the criteria then a price can usually be offered instantly.
Single Invoice Insurance
Trade credit insurance to cover single or multiple invoices with one customer. Cover is for insolvency only up to a maximum credit limit of £500,000 for 12 months from the due date of the invoice. Aimed at SMEs, coverage can be checked instantly and policies purchased via an online portal.
Financial Institutions
Insurers have a range of trade credit insurance products that are developed specifically for financial institutions. The policies offer cover for a variety of funding arrangements where there is associated trade transaction.
What is Bad Debt Protection?
Trade credit insurance is also commonly known as bad debt protection. When one of your debtors goes insolvent, or into “protracted default” (where they are solvent but are still unable to pay one of your invoices for an extended period of time), having bad debt protection allows you to be compensated.
This insurance mitigates the threat that unpaid invoices can pose to your cash flow, your growth, and even to your company itself. You can feel confident that late payment or non-payment from one of your customers is not going to negatively affect your cash flow.
Contact FinCred for a bad debt protection quote today.
How Credit Insurance Can Benefit Your Business
Improves Cash Flow – Protect your business against fluctuations in cash flow caused by bad debts and unpaid invoices.
Facilitates Growth – Trade confidently with new customers and increase trade with existing customers.
Enhances Profitability – Increase exposure to customers safe in the knowledge that this risk is protected.
Delivers Vital Insight – Avoid bad debts with in-depth information on your customers and markets to support your credit management and enable the business to make informed decisions.
Creates a Competitive Advantage – Trade at higher volumes on open credit terms compared to your competitors.
Provides Funding – Access finance and funding opportunities.
Work With FinCred, A Leading Trade Credit Insurance Company
As a highly experienced UK credit insurance broker, FinCred is uniquely equipped to help you navigate the complex markets of trade credit insurance.
As an independent company, we can act with your best interests at heart. That’s why we think of ourselves as insurance partners to our clients. From first contact to after the policy is in place, we are in your corner, arranging the best trade credit insurance solution possible for you.
Our service is bespoke. No two companies are the same. We find trade credit insurance policies that satisfy your unique needs.
Contact us today for your trade credit insurance quote.
