Trade credit insurance FAQs

Trade credit insurance protects your accounts receivable against the risk of non-payment due to insolvency or protracted default, while giving your business the insight and confidence to grow revenues with new and existing business customers.

Acting as an early warning system for potential payment issues, trade credit insurance allows you to trade safely with new customers, trade more with existing customers and expand to new sectors or export markets.

We start by assessing the creditworthiness and financial stability of your customers, in order for us to underwrite safe credit limits on them, with risk coverage up to the agreed limit.

We provide regular updates on those trading limits, adjusting them based on changing conditions. And we support your business growth by repeating this process for new customers.

In the event you tell us about a non-payment for an insured customer, we investigate, and if policy terms are met, we indemnify you for the insured amount.

Any business that sells goods or services on credit terms to other businesses can benefit from trade credit insurance. This includes businesses of all sizes and all industries, from small and medium-sized enterprises to large multinational corporations.

Trade credit insurance covers your business against the risk of non-payment by your customers due to insolvency, protracted default, or, where applicable, certain political events.

Experience tells us that economic and commercial pressures can affect the financial health of all companies, including long-standing customers and previously reliable payers.

Evaluating the on-going risk of non-payment requires a significant amount of effort and expertise in obtaining and evaluating the latest financial information, that’s not always publicly available. Which is where we and Trade Credit Insurance come in.

Yes, it is possible to cover existing, long-term deals. Each scenario is different and would need to be addressed on a case-by-case basis.

Yes. However, if we’ve issued a nil limit against a customer, you won’t be covered if something goes wrong. In this case, it’s important to consider and mitigate the potential risk when deciding whether to extend credit.

We work with thousands of B2B sellers that certainly think so.

Trade debts can make up to 40% or more of business assets, and even one of your customers failing to pay can often have a big impact on your cash flow and working capital.

If, for example, you have a 5% profit margin and suffer a £100,000 debt, you’ll need to win additional sales of £2 million to make up for the lost profits.

Bad debts can also reduce your ability to invest in your business, and mean you incur interest on borrowings you may need to counteract losses.

Trade credit insurance may help your business to access finance by providing reassurance to lenders and investors that you’re protected against the risk of non-payment. This can make it easier for your business to secure loans, overdrafts, and other forms of finance.

Yes, you can customise your trade credit insurance policy. We offer a range of policy options, and work with you to find a solution that works for you and meets the needs of your business.

The cost of trade credit insurance is based on a number of factors including the size and nature of your business, the creditworthiness of your customers and the trading limits you need.

It’s calculated for your business and the way you trade and is based on a percentage of your sales, generally a fraction of 1%. So, if your sales were £2 million last year and you wanted to cover that entire amount, the premium would usually be less than £10,000. But remember, premiums can go up or down from year to year.

Getting a price indication with us online is quick and easy for you to in a matter of minutes on our website: Trade credit insurance price calculator.

The time it takes to set up your policy can vary depending on the complexity of your needs and business, and level of risk involved. Some policies can be issued within a matter of days, while others may take several weeks to put in place.

No, trade credit insurance isn’t mandatory, although some funders can insist that cover is in place. Ultimately, the decision to access the benefits of cover is the decision of individual businesses.

Trade credit insurance protects your business against the risk of customer non-payment, whist factoring allows you to sell your unpaid invoices to a third party, called a factor, who assumes the debt, in exchange for cash.

Trade credit insurance and factoring can work hand-in-hand, for example by insuring a factor’s portfolio. You can find out more about factoring in our article on invoice finance.