Trade credit insurance is an important tool for businesses looking to protect themselves against trade credit risk. This type of insurance can help to mitigate the potential impacts of bad debt and insolvency, allowing businesses to expand and grow with confidence.
Trade Credit Insurance
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A trade credit insurance policy provides a valuable extension to a company's credit management practices - a second pair of objective eyes when approving buyers, as well as an early warning system should things begin to decline so that exposure can be effectively managed.
What is Trade Credit Insurance?
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FAQ - Frequently Asked Questions
Trade Credit Insurance is indeed a valuable investment. Trade debts can constitute a significant portion, often 40% or more, of a business's assets. Even a few instances of non-payment can severely impact cash flow. The cost of such non-payment can be substantial, especially for businesses with thin profit margins. For instance, a debt of $100,000 with a 5% profit margin would necessitate sales of $2 million to recoup the lost profits. Beyond financial losses, bad debts can weaken a company's financial position, leading to reduced cash flow, higher interest charges from banks, and lower employee morale due to concerns about job security. Considering these effects, trade credit insurance becomes a valuable safeguard to protect businesses from such risks and losses.
Every business can benefit from effective credit management, and Trade Credit Insurance is one of the most important tools for achieving that. If your business sells to other businesses on open account terms, trade credit insurance can offer numerous advantages. Even if you have different trading terms, there are specialized services that can support and strengthen your trading activities. Tailored trade credit insurance offers are available to suit various types of businesses and transactions, so feel free to contact us to discuss the most suitable option for your needs.
Our Trade Credit Insurance is primarily designed for businesses with annual sales of at least $5million. If your sales are below this threshold, our insurance may not be the most suitable option for you. We recommend consulting your insurance broker or business bank manager, who can suggest other ways to protect your business that align better with your size and needs.
Even when trading with longstanding, seemingly financially stable customers, it's essential to be mindful of potential risks. Economic cycles and commercial trends can impact even the most robust businesses. Monitoring customers' financial health and assessing the risk of non-payment requires substantial investment in data collection. Trade Credit Insurance providers like us undertake this investment on your behalf and provide valuable analysis, allowing you to trade with confidence across all phases of the economic cycle.
To maximize the benefits of trade credit insurance, consider reviewing your processes and procedures if you're new to this type of insurance. We can provide advice on best practices to optimize your policy's value. Train your employees on using our systems effectively, utilize our information on limits and grades to enhance credit control, and protect against catastrophic bad-debt losses. Demonstrate the improved quality of your accounts receivable while negotiating with lenders for better terms. Incorporate our data into your sales planning to target financially sound new customers. Leverage our information to identify risks in new markets and opportunities for your business strategy and plans. Take advantage of our debt collection capabilities and network to accelerate payment speed. Aligning your processes with our systems can enhance efficiency and strengthen your cash flow by insuring invoices and obtaining indemnity for non-payment. Additionally, design your financial management and reporting to identify performance improvements effectively.
Yes, our policy wording for Trade Credit Insurance is Sharia compliant.
Allianz Trade is an AA Rated Insurer, instilling confidence in our ability to settle claims and provide reliable account servicing both presently and in the long term. Our Policy Holders and partners consistently rate us highly, with our most recent Net Promoter Score (NPS) ranking us as the top performer in the GCC region market.
Providing us with authorization to use your company's name facilitates the establishment of a relationship with buyers who may not have been familiar with us previously. Additionally, if required, we are more than willing to sign a Non-Disclosure Agreement (NDA) to ensure the utmost confidentiality in our communications.
Selecting a Trade Credit Insurance policy presents several advantages, such as promoting business growth, providing peace of mind, fortifying your business against the uncertainties of both local and global markets, and serving as a valuable partner to your existing credit management processes.
Choosing a TCI policy offers you several advantages. These include fostering growth, providing peace of mind and security, preparing your business to navigate the unpredictable circumstances both locally and globally, and complementing your already robust credit management processes.
Having a diversified portfolio of buyers helps mitigate risk and enhances the flexibility of the policy. When all buyers are perceived as weak, it raises the risk associated with the policy, leading to potential limitations in flexibility and requiring pricing adjustments to align with the perceived risks covered. Therefore, by ensuring coverage for a range of buyer categories, you can create a more robust and resilient risk management strategy.
Trade Credit insurance product provides you several advantages and serve various purposes. Firstly, it enables you to confidently expand your business by engaging with new buyers and expanding into new markets or countries. Furthermore, it acts as a protective shield, safeguarding against unforeseen events and losses stemming from buyer defaults.
In addition to these core benefits, the coverage extends to a diverse portfolio of buyers, both well-graded and less well-graded buyers. This thoughtful approach ensures a balanced risk profile, reinforcing our clients' risk management strategy. Moreover, the inclusion of comprehensive risk information and expert guidance empowers our clients with relevant insights and valuable support throughout their business journey.
Allianz Trade refers to a diverse array of reputable sources to obtain information on companies and buyers. These sources include information providers, state authorities, financial statements submitted by buyers to the insurer, and others.
At Allianz Trade, we hold privacy and confidentiality in the highest regard. We strictly adhere to data protection regulations and maintain the utmost integrity when handling such information. Our goal is to furnish policyholders with a comprehensive and trustworthy assessment of buyers' creditworthiness while upholding the trust and confidentiality of all parties involved.
Yes, Trade Credit insurance can offer coverage for non-payment resulting directly from political events in the buyer's country. Events such as war, contract cancellations by local governments, restrictions on exports or imports, and regulations affecting hard currency transfers are examples where trade credit insurance can provide protection to exporters concerned about political risks.
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Protect against bad losses
Protect and grow your business. Have the confidence to trade, and get paid.
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Reliable and sustainable provider of credit risk management solutions for multinationals operating globally.
Tell us about your customers, and we'll tell you about the trade risks... and opportunities.
Why choose Allianz Trade for your trade credit insurance
CUSTOMER HEALTH
We analyse the credit worthiness and financial stability of your customers.
CREDIT LIMIT CALCULATED
Each customer has a limit which is the maximum amount we will indemnify if that customer fails to pay.
BUSINESS AS USUAL
You trade with your existing customers as you wish, with the risk covered up to the limit.
TRADING LIMIT UPDATES
We keep you informed of adjustments to limits as they may be raised or reduced when conditions change.
BUSINESS BUILDING
You check the credit worthiness of potential new customers. We confirm agreement or explain if your request is declined.
MAKING A CLAIM
You tell us if a customer fails to pay, we investigate, then indemnify you for the insured amount if policy terms have been met.
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.