It’s not uncommon for a company’s accounts receivable to represent somewhere near 40% of its assets, but anytime you have any accounts receivable, you want to know that you are protected against things such as bankruptcy or insolvency on the buyer’s end.
The more that credit, financing, and debt play a role in your business, the more serious you will need to be about protecting your assets. Trade credit insurance aims to help companies manage their credit, but it also aims to prevent bankruptcies and insolvencies from affecting your income.
What Is Trade Credit Insurance?
Trade credit insurance protects sellers from buyers that either cannot or will not pay for whatever reason. Most commonly, this insurance protects sellers in the event of a buyer bankruptcy or insolvency, but there might be similar legal situations that would warrant the same coverage. This insurance may even protect you from buyers who delay payments as part of their bankruptcy agreement.
In general, the trade credit insurance prevents situations that prevent you from being able to recover outstanding debts. As a result, you can feel more secure and confident in your business transactions.
Working with a Broker
There are a variety of insurance companies that offer trade credit insurance, but it can be difficult to find the one that offers both the best price and the best service. Working with a brokerage such as Niche Trade Credit, ensures that you are able to navigate the different insurers and find the one that best suits your needs.
Your brokers work with a variety of insurers, and in doing so, they can get you the best coverage options that are available. More importantly, they make searching for an insurer less stressful, and they make it easy to find what will work best for your business.
Trade Credit Insurance Is Tailored
Every business is different, and every business’s needs are different, which is why trade credit insurance is largely tailored to fit those needs. When you go to get an insurance policy, your insurers will listen to your needs and do their best to get you a coverage option that meets the demands.
Credit insurance can cover your entire collection of accounts receivable, but you can also pick and choose which accounts you want to be insured. If you have a few accounts that you rely on heavily, these may be the ones you choose to have insured, but different businesses will make different decisions.
An insurance brokerage, sometimes, offers more than just credit insurance. For example, you can often get assistance recovering and collecting debts.
Those who export products and services to companies overseas will also be able to get the right credit insurance, as your insurance brokerage will work with both export credit insurance and political risk insurance, and they will be able to work with you to get you what you need. Otherwise, to ensure you are covered when your buyers are unable to pay, the right trade credit insurance policy will keep you protected.