As a business owner, you are aware of the risks and rewards of offering your customers credit. In some industries, credit is an essential factor in your business’ ability to compete. However, when you are offering your goods and services in good faith, you expect to be paid in full and in a timely manner. When your customers do not hold up their end of the deal, it can have disastrous consequences for you and your company, even though you are not a fault. In instances such as this, trade credit insurance can save you from ruin.
What is Trade Credit Insurance?
Trade credit insurance (sometimes called accounts receivable insurance, debtor insurance, or export credit insurance) is cover that protects your business from bills your customers are unwilling or unable to pay.
What Reasons for Non-payment Are a Part of a Trade Credit Policy?
While the details of specific policies vary, generally most trade credit cover includes non-payment because of the following circumstances.
- Customer bankruptcy
- Political unrest
- General default
Who Should Have a Trade Credit Insurance Policy?
You should consider a policy if your company provides its customers with goods or services on credit terms, whether nationally or internationally. Trade credit insurance will protect you from customers’ defaults.