Trade Credit Insurance

In Plain Terms

Trade credit insurance protects business-to-business (B2B) sellers when buyers fail to pay their invoices due to bankruptcy, insolvency, or prolonged delays. Policies typically cover 80% to 90% of the lost debt, safeguard cash flow, and offer buyer credit intelligence to help companies safely extend sales terms.

01
Buyer

You sell to a business buyer on credit terms.
02
Invoice

The invoice sits unpaid on your balance sheet.
03
Payment Risk

The buyer becomes insolvent, or simply does not pay.
04
Protection

The policy indemnifies the majority of the loss.

Key Coverages

Commercial Risk: Covers buyer bankruptcy, insolvency, or protracted default (failure to pay after a set period).
Political Risk: Covers overseas buyer non-payment caused by currency restrictions, war, or sudden import/export bans.
Partial Indemnity: Usually covers up to 90% of the invoice value, leaving a small portion uninsured so the seller retains baseline risk.

Core Benefits

Cash Flow Protection: Indemnifies the policy holder with unpaid funds to keep working capital stable.
Better Financing: Helps secure invoice financing or trade finance-related bank loans because trade credit insurance policies can be pledged to the financiers or bankers as a credit enhancement tool. Claim proceeds will then be made to the financiers or bankers directly.
Risk Assessment And Monitoring: Trade credit insurers provide active credit limits monitoring and receivables management data on new or foreign clients through their credit management partners.