15 July 2024
Trade credit is a crucial tool in commercial operations, essential for protecting your cash flow. Opting for a trade credit insurance policy is paramount in effectively managing trade credit risk. However, selecting the right provider can be challenging. At Allianz Trade, we specialize in offering comprehensive trade credit insurance solutions tailored for businesses in the UAE and KSA. Our expertise ensures that your accounts receivable are safeguarded against non-payment and credit defaults, supporting your commercial development in the long term. Trust our experience to navigate risky situations and maintain the stability of your business operations. Contact us today to learn more about how our trade credit insurance can benefit your business.
Summary
Key Takeaways
- For businesses in the UAE and KSA, securing robust trade credit insurance is essential to mitigate insolvency risk and ensure stable cash flow, especially in unpredictable circumstances.
- Your trade credit insurer typically conducts thorough analyses and provides continuous updates on the financial health and creditworthiness of your new and existing customers.
- Allianz Trade is the leading provider of Trade Credit Insurance globally, with on the ground presense in UAE and KSA.
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What is trade credit insurance?
For businesses in the UAE and KSA, securing robust trade credit insurance is essential to mitigate insolvency risk and ensure stable cash flow, especially in unpredictable circumstances.
In the event of non-payment by your customer, trade credit insurance provides coverage, indemnifying a portion of your accounts receivable. Essentially, it acts as bad debt insurance, safeguarding your finances against potential losses.
While the concept of trade credit insurance is straightforward, its effective implementation requires extensive expertise to fully capitalize on its benefits. At Allianz Trade in Middle East we offer specialized solutions tailored to local market dynamics, ensuring your business is protected and possitioned for growth.
What is included in a trade credit insurance policy
Trade credit insurance encompasses a broad spectrum of services aimed at protecting businesses in the UAE and KSA. It's crucial to have a clear understanding of what your trade credit insurance policy covers.
Predictive protection:
Your trade credit insurer typically conducts thorough analyses and provides continuous updates on the financial health and creditworthiness of your new and existing customers. This helps you gauge their likelihood of timely invoice payments and avoid engaging with potentially risky customers.
Additionally, your insurer establishes credit limits for each customer, indicating the maximum amount they will cover if the customer defaults on payment. This proactive approach allows you to anticipate bad debt risks and adjust your credit management policies promptly.
This aspect is crucial: your insurer should be more than just a service provider; they should be a long-term partner who supports your commercial development by offering daily advice and strategic insights.
Debt Collection:
In the UAE and KSA, when faced with unpaid invoices, you notify your trade credit insurer. If your policy includes debt collection, your insurer initiates procedures to investigate and recover the debt, considering that your customer may just need additional time to settle.
If your customer declares bankruptcy, your insurer handles communications with the receiver or liquidator on your behalf.
This service enables you to optimize your operations by outsourcing a potentially costly and time-consuming task.
Debt collection demands specialized expertise that many companies, particularly SMEs, may lack. Commercial laws vary significantly between countries, requiring a deep understanding of local regulations to navigate recovery processes effectively. Allianz Trade country risk reports provide insights to manage these local risks and practices efficiently.
The nature of risks is increasingly influenced by political factors, including Brexit, the Chinese-American trade tensions, geopolitical shifts, and monetary policy changes. Therefore, insurers must possess strong macroeconomic and geopolitical expertise to assess credit risks accurately.
Certain insurers also offer political risk insurance for specific scenarios such as civil conflicts, government actions, or monetary crises.
Indemnification:
If attempts at debt collection prove unsuccessful, regardless of your client's legal status, you are indemnified for the insured amount according to the terms of your policy, often covering up to 90% of the debt. Whether through debt collection or indemnification, you should recover most or all of the money owed to you.
Trustworthiness is paramount: your insurer must provide transparent terms of compensation.
Such a service also necessitates an insurer with sufficient financial stability to navigate challenging economic conditions—particularly pertinent during the Covid-19 pandemic, when trade credit risks are exceptionally high.
How much does trade credit insurance cost?
Typically, the premium for your bad debt insurance is determined based on your industry sector and annual turnover.
Premiums can vary based on the coverage type and industry sector chosen.
It's crucial that your insurer provides transparent pricing so you can accurately assess your potential return on investment.
When calculating your ROI, remember to factor in all costs associated with internal credit risk management: expenses for information gathering, debt collection, financing working capital, and opportunity costs for commercial activities.
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Why choose Allianz Trade as your trade credit insurance provider
With over a century of expertise and as part of Allianz, we are recognized as a leading specialist in trade credit insurance. Our global presence spans more than 50 countries, with 6,000 dedicated employees serving over 55,000 clients.
Our strength lies in our comprehensive offering, encompassing all essential aspects of credit risk insurance. We tailor solutions to companies of all sizes and across diverse sectors.
Here’s what you can expect:
- Financial analysis capabilities: We continuously assess the credit risk and solvency of your partners’ customers / buyers.
- Legal expertise: Our team excels in debt collection procedures, supported by deep local knowledge.
- Financial Strenght: With an AA financial rating from Standard & Poor's, we guarantee your indemnification and comprehensive risk coverage.
Additionally, our Economic Research Team provides invaluable insights into current and future micro- and macro-economic trends. Explore our country and sector reports, including coverage of the economic impacts of Covid-19.
With our extensive analysis and operational capabilities in trade credit risk, our solutions empower you to implement a robust and secure credit control policy. Contact our local teams in the UAE and KSA to begin securing your future growth.
Our expertise and commitment
Allianz Trade is the global leader intrade credit insurance and credit management, offering tailored solutions to mitigate the risks associated with bad debt, thereby ensuring the financial stability of businesses. Our products and services help companies with risk management,cash flow management, accounts receivables protection, Surety bonds, business fraud Insurance, debt collection processes and e-commerce credit insurance ensuring the financial resilience for our client’s businesses. Our expertise in risk mitigation and finance positions us as trusted advisors, enabling businesses aspiring for global success to expand into international markets with confidence.
Our business is built on supporting relationships between people and organizations, relationships that extend across frontiers of all kinds - geographical, financial, industrial, and more. We are constantly aware that our work has an impact on the communities we serve and that we have a duty to help and support others. At Allianz Trade, we are strongly committed to fairness for all without discrimination, among our own people and in our many relationships with those outside our business.