Trade credit insurance protects businesses from non-payment of commercial debt. It covers your business-to-business accounts receivable. If you do not receive what you are owed due to a , insolvency or other issue, or if payment is very late, a trade credit insurance policy will reimburse you for a majority of the outstanding debt. This helps you protect your capital, maintain your cash flow and secure your earnings while extending your competitive credit terms and helping you access more attractive financing.
With trade credit insurance, you can reliably manage the commercial and political risks of trade that are beyond your control. Trade credit insurance can help you feel secure in extending more credit to current customers or pursuing new, larger customers that would have otherwise seemed too risky.
The cost of your trade credit insurance policy will vary depending on your industry, your annual revenue that needs to be insured, your history of bad debts, your current internal credit procedures and your customers’ creditworthiness, among other factors.
If you sell to clients in a mix of industries and countries, your rates will reflect the risk determined to be associated with all of them.
Your premium is based on a percentage of your sales, conservatively around 0.25 cents on the dollar. If your sales were $20 million last year and you want to cover that entire revenue, your premium would typically be less than $50,000.
A trade credit insurance policy can typically offset its own cost many times over, even if you never make a claim, by increasing your sales and profits without taking on additional risk.
Getting a trade credit insurance quote is the most accurate way to determine cost. There are many different policies designed to cover specific business needs.
Remember, your trade insurance premium can change depending on multiple variables, including: