What is trade credit insurance?
Trade credit insurance provides protection of accounts receivable (sales to buyers on credit) from losses due to credit risks, such as default, insolvency and bankruptcy.
Cover is up to 90% of invoices value.
The buyers can be in the same country of the insured business (domestic trade) or in another country (export).
The main purpose of the trade credit insurance is to transfer the risk of payment default to the insurance companies so the business can be more involved in trading and marketing.
Defaults can lead to catastrophic results on businesses:
– Dependency on clients payment behaviors.
– Burden in trying to collect overdue invoices.
– Liquidity and cash flow difficulties.
– Credit Losses due to unpaid invoices.
– Difficulty to be granted loans from banks.