Why do traders take out Credit Insurance?

Why take out a credit insurance policy: Learn about the benefits of credit insurance and how it can protect your business.

  1. To prevent bad trade debt by having buyers vetted by the credit insurer to assess if the buyer can pay on time each time a sale is made to them
  2. To enhance their credit control and cash flow positions. By insuring receivables against unexpected customer insolvencies and undue delays (protracted default) the trader gets relief from the risk of non-payment
  3. To be compensated for insured losses
  4. To obtain objective credit risk assessment on the buyer
  5. To sell more safely to new customers – local and export
  6. To expand sales to existing customers
  7. To develop a trusting business relationship
  8. If needed, to acquire additional working capital by using a trade credit insurance policy as collateral for its bank financing package

Related content

What is trade credit insurance?

If your customer fails to pay, trade credit insurance safeguards your business. In many instances, credit insurers may cover up to 90% of the debt.

What is credit risk?

Credit risk is a term applied to the dangers associated with lending anyone goods, services or money.

Why credit management is important?

The way you approach credit management can determine whether your business thrives or fails: