What is Trade Credit Insurance And What You Need To Know?
What is Trade Credit Insurance?
Trade credit insurance, also known as credit insurance, is a risk management tool that covers losses arising from non-payment of goods and/or services. There is a significant amount of trade credit risk when doing business domestically or internationally. It is here that trade credit insurance gives you the confidence to grow profitably and to extend credit to new customers without the fear of losing money if the customer was to become insolvent.
How Does Credit Insurance Work?
Our trade credit insurance policy works in a simple way. When setting up the credit insurance policy, you provide information on your business and your customers. We review the financial health of your customers in order to establish credit limits and terms of business which reflect your commercial needs. During the course of policy, we continuously monitor your customers and adjust the coverage accordingly. With time, as your sales increase, we can include your new customers into the policy and increase coverage on existing customers. By any chance if the payment is not made on time or if anything goes wrong, notify us and rest assured that you will get most of your money back. Our professional and experienced debt collection experts will work for you to recover your payments.
Types of credit risk covered by Trade Credit Insurance
The various types of credit risk covered by trade credit insurance are: Bad debts due to customer insolvency, protracted default (late payment) and political risk, which is non-payment because of events such as wars or currency exchange restrictions.
How is Trade Credit Insurance Different From Other Types of Insurance?
By contrast, the best credit insurers actively support their client’ trading throughout the year and provide an early warning system about changes in the risk status of customers so they can avoid foreseeable losses. To be effective, credit insurance should be a partnership between both parties. The client provides information about the customer’s payment behavior and also notifies overdue payments to the credit insurer. Meanwhile, the credit insurer provides the client access to its wealth of business intelligence and expertise in credit risk. Working together, they can assess the level of credit risk, agree credit limits, adjust the levels of cover, determine the financial health of customers and focus on the most stable.
We monitor over 200 million companies in Singapore and worldwide so when you partner with “Coface Singapore” you’ll have access to:
- Customer and supplier credit checks on demand
- The latest business and economic trends
- The information you need to make informed credit risk decisions
- The confidence to offer competitive credit terms and win more business
To find out more about how we can help your company trade confidently, get in touch today.