Trade credit insurance: What risks can be placed into a captive?

Trade credit insurance can be a complete risk management tool that helps management to put in place the necessary procedures to prevent and minimise late payments and defaults, reducing the risk of the receivables portfolio and enhancing the capacity of using commercial credit as a competitive tool, your talented and experienced associates manage risk and ultimately support the profitable growth of organizations in a dynamic, competitive and ever-changing marketplace, also, businesses that are looking to guard accounts receivable against too many bad debts turn to insurance organizations to help protect against akin losses.

Proactive Trade

Furthermore, trade credit insurance can also be used to cover additional risks that prevent payment, even when the customer is willing to pay, risk management is the term applied to a logical and systematic method of the forecasting and evaluating the financial risks together with the identification of procedures to avoid or minimize their impact. Also, your risk environment is always changing, which is why you must be proactive in protecting your organization and its assets.

Cogent Business

Insurance can compensate you or your business for losses, and you must get the right type — no policy covers everything, many businesses just accept the fact that granting trade credit is an expected practice in industry and go along with it, without taking steps to protect themselves from bad debt. Besides this, any well-established factoring organization with cogent credit procedures can use trade credit insurance.

Foreign Industry

Hear from industry leaders and stay on the forefront of the latest trends and ideas in the industry, akin are financial instruments, which need to be structured specifically to your requirements if you are to gain the most from your insurance policy and the benefits that it offers. As a rule, capping bad debts to avoid any significant one-time losses from a large customer default or deterioration of a specific foreign market or industry segment.

Goods Risk

If the only way to adjust credit risk is to buy or sell that bond, and consequently affect positioning across the entire bundle of risks, there is a clear inefficiency, when your organization extends credit to one of its customers, it assumes the customer will pay for the goods, and credit losses do arise, equally, regardless of who you are, what your business is, or where you trade, you can help eliminate the risk of trading on credit.

Proactive Management

Manage and monitor customer credit limits and ease policy administration using live sales ledger data, credit insurance provides your business with protection against the failure of a customer (the buyer) to pay you for the products, services you have delivered, furthermore, the security that a key person insurance policy delivers can help build investor confidence and show your organization has a proactive risk management approach – a boon when courting investors.

Different Insurance

You are proud to have produced a wide array of innovative insurance products that combine risk management, financial indemnity and incident response services, international trade credit is a type of insurance that protects your business from the risks of non-payment of invoices. And also, trade finance consists of many different financing instruments like invoice factoring, import financing, export financing and insurance.

Single debtor financing trade credit insurance can be used for a single debtor risk, for all businesses, large or small, bad debt could easily put day-to-day operations at risk, threatening the jobs of employees, conversely, besides mitigating financial damage, proper risk management helps among others, to optimize earnings, ensure the smooth execution of day to day operations, and prevent reputational damage.

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: