Trade Credit Insurance, also known as Accounts Receivable (AR) Insurance, is a form of commercial insurance that protects businesses in the event that a customer fails to pay their bill.
If your business offers goods or services to clients with payment terms (such as Net 30 or Net 60), you are at risk of not getting paid. Do you have a contingency plan if your biggest customer (or customers) doesn’t pay their bill on time? What about if that customer files for bankruptcy or goes out of business? For many companies, this situation results in a big hit to the wallet along with unnecessary stress, pressure, and uncertainty.
According to a study, accounts receivable typically represents more than 40% of a company’s assets, and 1 in 10 customer invoices are delinquent. Every business owner understands the importance of protecting their assets. Unfortunately, many business owners are unaware that there is protection available for their accounts receivable.
How Credit Insurance Works
In the event that a customer fails to pay their bill, a claim can be filed with your trade credit insurance company to reimburse you for any losses. Your insurance premium is typically dependent on a percentage of your sales, but there are many variables that can affect your premium including previous losses, the industry you work in, and the customers you work with.
While trade credit insurance is valuable to any business that offers payment terms to their customers, these are some of the industries that we work closely with:
Oil and Gas
Transportation / Freight
Import / Export
Advantages to Credit Insurance
Provides reimbursement in the event that a customer is late or unable to pay their bill.
Allows businesses to be more flexible when choosing trading partners and customers because they have the right protection in place.
Banks and financial institutions may be more flexible regarding lending and interest rates for businesses with this type of risk management in place.
Trade credit insurance can provide protection during times of political risk.
While this form of insurance coverage is especially applicable to larger companies, it can be a great fit for small businesses as well. Speak with an agent today to see if your company would benefit from a solution like this.
Why Work with Alliance Insurance Group
With access to multiple trade credit insurance carriers, we have the ability to shop for your business and find you the best coverage that fits your unique situation.
At Alliance, we strive to get to know you and your business so we can provide products and services to support your growth and business goals. Each individual business is different, and therefore the solutions that we offer to each business is different. Our goal is to help you grow your business, and protect you along the way.
In addition to helping our clients with accounts receivable coverage, Alliance works with businesses of all sizes on all of their insurance, payroll, benefits, human resources, and financing needs. Click the links below to learn more about those services:
To learn more about Trade Credit Insurance, or other ways that Alliance can help you grow and protect your business, please fill out the form below and one of our agents will reach out shortly.
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