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Trade Credit Insurance

What is Trade Credit Insurance?

Trade Credit Insurance (also known as Debtors Insurance) protects businesses from bad debts due to client insolvency and payment defaults. This type of insurance ensures that your cash flow remains stable and your business operations are not disrupted by non-payment from customers.

Importance of Trade Credit Insurance: For most businesses, the money you are owed is one of the largest assets, and yet it is often not insured. Even the most disciplined credit management cannot prevent bad debts. No matter how careful you are, your customers can sometimes fail to pay.

Key Benefits:

  • Protection Against Bad Debts: Safeguards your business against losses arising from customer insolvency or payment defaults.

  • Cash Flow Stability: Ensures that your business cash flow remains stable, even if customers fail to pay.

  • Credit Management Support: Provides support and guidance in managing your credit risk effectively.

  • Financial Security: Protects your business from financial losses, allowing you to focus on growth and expansion.

Why Trade Credit Insurance is Essential: What would be the impact of one of your largest customers failing to pay you? Without Trade Credit Insurance, your business could face significant financial strain, potentially affecting your ability to operate smoothly. This insurance provides a safety net, ensuring that your business remains financially secure even in the face of non-payment.

Coverage Details: Trade Credit Insurance typically includes coverage for:

  • Client Insolvency: Protection against losses due to customers becoming insolvent.

  • Payment Defaults: Coverage for non-payment of invoices by customers.

  • Political Risks: Protection against losses arising from political events that impact payment.

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Who should consider Trade Credit Insurance?

Any business selling goods and services on credit terms with exposures to bad debts should strongly consider trade credit insurance as part of their business risk strategy. Self-insurance or a bad debt reserve does not replace monies lost, whereas trade credit insurance puts cash back in your hands.

There is no ‘one size fits all’ approach when it comes to Trade Credit Insurance and the level and cost of your policy will be dictated by your needs.

What are the Benefits of Trade Credit Insurance?

  • Cashflow Relief - Swift access to replacement capital before permanent damage is done to your business.
  • Improve Credit Management - Greater access to information on your customers having an insurer assess the credit risk.
  • Insolvency Protection - Peace of mind knowing your hard work is protected if a major client becomes insolvent
  • Improved Sales - Grow your customer base with support and confidence to extend larger credit limits and more favourable trading terms
  • Better Banking Relationships - Strengthen access to credit facilities from financial institutions who can be named on the policy as a loss payee.

Want to know more? 

Submit an enquiry on our Contact Page or call Natalee Beadman on 0401 789 720.