Trade Credit Insurance - Secure Your Cash Flow, Minimize Risk
Securing Your Receivables – Stability for Your Business
In today’s dynamic market environment, effective credit risk management is essential for ensuring your company’s financial stability. Trade credit insurance helps reduce financial exposure and strengthens your customer relationships by protecting your receivables in the event of non-payment.
It covers outstanding payments from goods delivered or services rendered—minimizing liquidity shortfalls and reducing the impact of customer defaults. Most policies also include credit checks and debt collection services to proactively manage your credit risk.
Security and Growth Through Trade Credit Insurance
Trade credit insurance not only protects your cash flow, but also boosts your competitive position and supports sustainable business growth. It enables you to establish a professional receivables management strategy and shields your business from unexpected financial losses.
Our experts at Breffka & Hehnke are here to help you find the optimal trade credit insurance solution tailored to your company’s specific needs.
What is Trade Credit Insurance?
Trade Credit insurance—also known as credit insurance or accounts receivable insurance—protects businesses against financial losses caused by unpaid invoices.
This form of insurance is especially relevant in B2B transactions with payment terms ranging from 30 to 180 days, where a customer default can severely impact cash flow. It acts as a financial safety net, securing your domestic and international receivables and helping to maintain liquidity even in the event of non-payment.
How Trade Credit Insurance Works
- Credit Assessment: The insurer evaluates your customers' creditworthiness and provides risk insights.
- Credit Limit Approval: Based on the assessment, a credit limit is set—the receivables within this limit are insured.
- Claims Settlement: If a customer becomes insolvent, the insurer covers the loss—minus a defined deductible.
Benefits of Trade Credit Insurance
- Protection Against Payment Defaults
Safeguards your business from financial losses due to unpaid invoices. - Secured Liquidity
Maintains healthy cash flow and shields your company from unexpected payment delays or defaults. - Credit Checks and Monitoring
Gain access to professional credit reports and ongoing creditworthiness monitoring of your customers. - Debt Collection Support
The insurer manages the debt collection process in case of overdue payments. - Growth and Market Expansion
Trade confidently with new customers and enter new markets with secured receivables.
Key Features at a Glance
- Protection against bad debt due to customer insolvency or delayed payments
- Support in claims handling and professional receivables management
- Greater financial planning security through predictable cash flow
- Ability to offer attractive payment terms and expand your customer base confidently
Types of Trade Credit Insurance
- Standard Trade Credit Insurance
Covers ongoing receivables from goods delivered and services rendered. - Capital Goods Credit Insurance
Designed for projects with extended payment terms (typically over six months), often involving machinery or large-scale contracts. - Export Credit Insurance (Hermes Cover)
Provides protection against political risks in international trade, especially for exports to emerging markets or high-risk countries.
- Standard Trade Credit Insurance
Cost of Trade Credit Insurance
The cost of trade credit insurance varies based on factors such as company size, industry sector, export share, and the credit risk profile of your customers. Premiums are typically calculated as a fraction (per mille) of annual turnover or outstanding receivables.
Key pricing factors include:
- Size and annual revenue of your business
- Risk levels within your industry and customer portfolio
- Past loss experience and claims history
- Chosen deductible and optional policy extensions
FAQs on Trade Credit Insurance
Trade credit insurance covers losses due to non-payment or payment delays
caused by your customers’ insolvency or default.
The insurance becomes active after a positive credit check. A credit limit is then assigned. In case of default, the insurer compensates the outstanding amount minus the agreed deductible.
Unternehmen jeder Größe, die auf Rechnung arbeiten und längere Zahlungsziele gewähren, profitieren von dieser Absicherung.
Companies of all sizes that operate on open account terms and offer extended payment deadlines benefit from this type of protection.
The premium depends on factors such as company turnover, industry, customer creditworthiness, and historical claims experience.
