What is Trade Credit Insurance?
Trade Credit insurance is protection against the risk of non-payment by a business’s debtors. It is suitable for businesses offering credit terms to end buyers and who want to protect their most important asset - their receivables. It covers the buyer’s non-performance under a contract of sale. It does not cover the supplier’s non-performance.
Credit insurance is protection against:
- Insolvency - voluntary administration, liquidation, bankruptcy, appointments or a receiver / manager;
- Protracted default - where the buyer fails to pay within the waiting period;
- Political events - covering losses in countries other than the suppliers country against foreign exchange blockage, import bans, public buyer default and natural disasters
Credit insurance is a risk management strategy that:
Reduces Financial Risk
- Protects cash flow and profits - supports your balance sheet;
- Reduces your provision for bad debts;
- Hedges against catastrophe
Improves Cash Flow
- Maximises debt collection
- Can improve a business’s access to finance - eg. If you are insuring your receivables a bank would be more agreeable to the provision of finance;
- Gives you access to a collection service via the Insurer
Supports your Credit Management Systems
- Gives you access to an on-line credit control system via the insurer’s system with access to credit information on 45 million customers worldwide
- Offers you an independent opinion as to whether you should offer a client credit terms
Improves your Sales
- Enables you to develop in new markets with new customers;
- Enables you to undertake a “financial health check” on potential new buyers and current buyers
How can Armbro help?
Not all brokers have the expertise in this niche area of insurance that Armbro do.
We ensure that our clients receive comprehensive policy coverage, claims management assistance and competitive premiums.
For more information or to obtain a quote please call our office on (03) 9572 0155 or click here and send us your enquiry.
Download Trade Credit Application Form