Any business that sells to another business usually does so on credit terms. When you agree credit terms, you incur a risk – that your customer can’t pay when they are supposed to. The impact on cash flow can be devastating, and even for businesses with substantial cash reserves it can impact on shareholder value, and cause plans for the business to be changed as you move to cope with the unexpected.
Trade Credit Insurance can help with that risk in a B2B environment. Simply put, when your customer does not pay, the insurer does, and the policy provides a set of basic credit management disciplines that can help to actually improve cash flow. The larger specialist insurers will also provide services (such as credit vetting and debt collection) as part of the package. By insuring, you join a `virtual credit circle’ which can help you to identify the bad customers before you have a problem. Cover can be purchased for
- A single debtor
- Exports only
- UK only
- To cover a single division
- Top debtors only
- On a catastrophe basis
Cover is limited to insolvency and protracted default (failure to pay) and, for exporters, a range of political risks. View some of the benefits of Credit Insurance here.