Credit and Invoice Finance Insurance
Credit and Invoice Finance Insurance, often referred to as Trade Credit Insurance, is designed to shield businesses from losses arising from non-payment of commercial trade debts. This can happen if a customer becomes insolvent or fails to pay within the agreed terms. This type of insurance allows businesses to manage the risks of default on domestic and international trade, ensuring that their cash flow remains stable and predictable even in the face of debtor insolvency or protracted default.
How does it apply to you?
For startups and scaleup companies operating in industries where they offer goods or services on credit terms, managing accounts receivable becomes a critical aspect of financial health. As these businesses grow, so does their exposure to potential bad debts. Whether it's a significant client facing sudden bankruptcy, political upheavals in a foreign market causing payment delays, or even typical cash flow hiccups faced by clients, such non-payment events can strain a growing company's liquidity and impede its growth trajectory.
Explained
In today's interconnected and volatile global marketplace, Credit and Invoice Finance Insurance is more than just a financial buffer—it's a tool for strategic growth. For startups and scaleups eyeing aggressive expansion, it facilitates safer and more aggressive credit decisions, while simultaneously fostering better relationships with clients by allowing flexible credit terms. By mitigating risks associated with trade credit, businesses can focus on innovation, market penetration, and sustainable growth.
Read our comprehensive guide to business insurance trending_flat
How much cover
do you need?
Trade credit and invoice finance insurance can often be quite an intricate underwriting process, as it requires an abstract view of the financials of your suppliers and customers. It may be that you just wish to insurer a handful of your largest customers accounts, which can often be more straightforward.
This class of insurance will often cover you for around 90% of the total outstanding invoice value, which is an important cosideration when deciding how much risk to take on with your customers.
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