Why trade credit insurance is a small business necessity​

You might see trade credit insurance as overly complex or just another expense, but without it your business could be exposed to unforeseen financial pressures when invoices go unpaid. Just as property insurance safeguards your physical assets, trade credit insurance is essential for protecting another valuable resource – your receivables. 

More than just protecting your cash flow, trade credit insurance provides you with a secure platform to pursue growth. It safeguards your existing assets and instills confidence, allowing you to engage with new potential clients that are the right fit.   

With Allianz Trade, you get more than off-the-shelf trade credit insurance products; our “A-Team” approach ensures you’ll receive tailored solutions unique to your needs, and services that are unmatched in the market.

Don’t make the mistake of thinking trade credit insurance is only for larger corporations or those dealing with an array of international clients. You may see it as an unnecessary expense, particularly if other business costs are weighing you down. However, this misconception can leave you vulnerable to risks which can disrupt your operations if left unchecked.  

If your customers default on their payments, the effects can quickly ripple through your business, delaying supplier payments or putting a strain on employee wages. Your company may be ill-equipped to cope with these types of financial shock. Without a safety net, even a single unpaid invoice has the potential to derail your finances.  

These risks are more common than many realise. From unexpected customer insolvencies to late or non-paying customers, the threats to your receivables could be constant. By viewing trade credit insurance as essential coverage rather than simply a “nice-to-have”, you can navigate unforeseen disruptions and thrive in unpredictable conditions rather than just survive.

Trade credit insurance is as vital to your business as property or liability insurance. Just as a helmet protects your workers on a construction site or a smoke alarm alerts your employees to the risk of a fire, trade credit insurance protects your business from the risk of unpaid invoices. Safeguarding your receivables is just as important as protecting your physical assets, and both are needed for your company to survive and grow.   

Without trade credit insurance, you expose your business to risks that can easily destabilise day-to-day operations. Your customers’ financial behaviour can be unpredictable, and even the most reliable business partner could default on a payment because of unforeseen circumstances. Trade credit insurance provides that added layer of security. It helps identify the financial strength of your customers and assess the likelihood they’ll default on payments. If your customer does default on their payments, your insurance policy will cover your receivables so your business can continue operating.

While unpaid invoices pose a threat to businesses of all sizes, if you’re operating on tight margins your company could be more at risk than larger firms. Just one payment default could expedite tough financial decisions, such as decelerating your growth plans, taking out costly bridging loans, or reducing employee headcount. In addition, unpaid invoices are more likely to have knock-on effects to your supply chain and put your supplier payments at risk.

Trade credit insurance ensures your business can withstand the short-term impact of payment defaults so that fewer difficult decisions need to be made. It also acts like a financial firewall, breaking the chain reaction of payment default so that your supply chain and supplier partnerships are protected.

More than risk mitigation, trade credit insurance can be your growth enabler. It provides a safety net so that you can focus on securing new customers and fulfilling orders.  

For example, Bellandi, a small Italian textiles business, has a long-standing partnership with Allianz Trade. Founded in the 1960s in Tuscany, Bellandi evolved from a single-product company producing woollen fabrics to a versatile textile manufacturer with an array of fabrics for both clothing and accessories.  

Over several generations Bellandi broadened its market reach, diversifying its products to include jerseys and natural fibres like cotton and linen. Sustainability became a priority, and Bellandi adapted its processes over time to use recycled fibres in its fabrics. For instance, its primary product – wool fabric – is now made from the recycled fibres of old, broken and frayed garments.  

Partnering with us has been key to the company’s long-term strategy. Bellandi benefits from more than just trade credit insurance: it also gains valuable market insights and help navigating complex industry regulations. With our support, and with effective insurance in place, the business is free to focus on what it does best: producing high quality fabrics for its customers using sustainable methods.

By protecting against unpaid invoices, trade credit insurance introduces certainty around your cash flow. This is essential for optimising budgeting processes and for strategic planning, but it also makes accessing finance easier.  

Banks realise that businesses using trade credit insurance tend to be more stable than those that don’t and are more likely to lend to those businesses as a result. With robust cash flow protection in place, you may find banks are prepared to offer you better financing terms due to perceived lower risk.   

Having trade credit insurance in place shows banks that you’re proactively managing your receivables and mitigating risks. This can instill confidence in lenders, potentially resulting in faster business loan approvals, higher credit limits and greater flexibility when you’re negotiating financing terms. Ultimately, trade credit insurance can open doors to vital funding for your company, which can help fuel its longer-term growth and stability.

We stand as your trusted partner, offering tailored solutions that let you integrate trade credit insurance as smoothly as possible. We’ll work with you to proactively manage risks and provide industry-leading advice and guidance.  

Now is the time to take the next step.

Explore your options with us and set your business up for growth, knowing trade credit insurance is protecting you at every stage.