Trade Credit Insurance

A Risk Mitigation Tool for Business

Why Trade Credit Insurance for Business?

Less than 1% of Canadian Accounts Receivable are covered by insurance. That massive exposure is made up of all of the business-to-business accounts receivable across Canada. The potential impact on an individual basis is even more telling when one considers that Accounts Receivable can form up to 40% of a Canadian business’ assets.

Are you worried about not getting paid by your customers?

Trade credit insurance is also known as receivables insurance and it protects your business from buyers – in Canada or abroad – that are unable to fulfill their invoice payment obligations. Such unforeseen trade disruptions can be caused by buyer insolvency, protracted default (failure to meet obligations on time due to inadequate cash flow), or political disruptions that lead to a loss on current receivables.

For smaller businesses, trade credit insurance allows them to effectively outsource some of the major components of their credit management. Receivables insurers have expertise in every market in the world, and specialize in assessing corporate credit risk in all manner of economic and political climates. Purchasing a receivables insurance policy gains access to these global resources.

A Financing Solution for Business Growth

Trade credit insurance operates in much the same way mortgage insurance is designed to protect the bank in the event of a foreclosure. Like mortgage insurance, trade credit insurance policy coverage can trigger more favourable finance rates. It can also increase the amount of cash available to you for sales growth through your working capital loan by increasing the value of receivables that can be margined. Insuring your receivables can also help your business establish higher lines of credit for your buyers, making it easier for them to purchase more products or services. For example, receivables insurance\trade credit insurance may allow your company to sell on 60-day terms instead of 30-day terms, or ship more products while they are in seasonal demand.