In today’s business climate, organizations are expected to extend credit to their customers, as it enhances purchasing power and creates opportunities that may not have been available otherwise. However, offering credit is a balancing act for most businesses, as just one late payment or customer insolvency can put stress on an organization’s cash flow and profitability.
Thankfully businesses can protect themselves using trade credit insurance. Trade credit insurance (also known as credit insurance or export credit insurance) is a form of insurance that transfers risk for businesses seeking to protect their accounts receivable against nonpayment.
The following risks can be insured under trade credit insurance:
- Nonpayment or late payment
- Customer bankruptcy, insolvency or similar legal status
- Nonpayment following an event outside the control of the buyer or seller
Most trade credit insurers offer their policyholders some or all of the following services:
- Proactive monitoring of a business’s customers to ensure their continued creditworthiness
- Up-to-date country reports that detail the potential risks for conducting business in foreign markets
- Management of outstanding receivables using complex financial solutions
- Proactive debt collection procedures
For many businesses, trade credit insurance is a vital piece of their insurance portfolio. Contact TPG Insurance Services today and one of our experienced insurance professionals will work with your business to find the right trade credit coverage.