Trade credit insurance is a simple and effective way to manage your credit risk
You may have already heard of trade credit insurance but don’t know much about it. Or you may be completely unfamiliar with it and are thinking “that sounds complex and daunting”. The Channel Partnership translates credit insurance into your language and helps explain how, when implemented well, it means better management of your business’ trade credit risk.
In layperson’s terms, trade credit insurance protects businesses like yours against the risk of loss of revenue if:
- your customer or client owes you money for products or services you have provided, and
- they cannot pay their debts.
This could happen for many reasons: such as a company defaulting because of poor cash flow, becoming insolvent, or going bankrupt. When you take out a trade credit insurance policy, you can insure your accounts receivable (debtors) against the risk that a customer will be unable to pay.
Trade credit insurance can also be referred to as debtor insurance, debtor protection, bad debt insurance, export credit insurance and accounts receivable insurance. We think that trade credit insurance keeps it simple.