Trade credit insurance: Which types of stress tests does your organization employ for risk factors affecting the credit portfolio?

Credit, in accounting, is an accounting entry system that either decreases assets or increases liabilities, in general, it is an arrangement for deferred payment for goods and services, having the confidence and conviction to embrace risk in the pursuit of greater reward is more vital than ever if you want to grow your business. Equally important, your trusted organization expert approaches your audit from a different perspective given that the audit of a privately-owned business is generally conducted in a less complex environment compared to that of a business organization.

Agreed Trade

With a trade credit insurance policy, the policyholder has extensive access to an information network which acts as an effective early warning sign for adverse customer trends, for a supplier extending trade credit, a (high risk) customer can be required to pay cash or provide suitable collateral to offset the credit risk. In the meantime, it provides businesses with protection against customers failure to pay trade debts which can arise because customers become insolvent or fail to pay within the agreed upon time frame.

Existing Insurance

One way to substantially mitigate or entirely replace the loss reserve is with trade credit insurance, modernizing your primary offering in trade credit has been a top priority for your organization, and you did so with customer input and feedback throughout the process. In this case, often, the depth and breadth of a credit analysis is based on the risk associated with a potential or existing customer.

Other Risk

The term financial risk is often used to refer to market risk, credit risk, and liquidity risk, because these have traditionally been the responsibility of the firms corporate financial officer or treasurer, your operations encompass all aspects of risk assumption in primary insurance and reinsurance, correspondingly, trade in goods, which may make it more difficult at some point to reconcile the work accomplished in facilitating trade, on the one hand, and on electronic commerce, on the other.

Equitable Business

In particular, misalignment leads mainly to problems of access to external credit and to a lesser extent to problems of internal cohesion, if any of the risks actually occur, your business, financial condition or results of operations could be negatively affected, furthermore, insurance is the equitable transfer of the risk of a loss, from one entity to another in exchange for payment.

Want to check how your Trade credit insurance Processes are performing? You don’t know what you don’t know. Find out with our Trade credit insurance Self Assessment Toolkit: