What is trade credit insurance?
It is a policy which pays you when your customers cannot or will not pay. This could be because their business has gone insolvent or they indefinitely delay payment.
What else will credit insurance provide?
As well as providing cover in the event of a bad debt, a credit insurance policy can also provide financial information on the credit worthiness of your customers, allowing you to make more informed trading decisions at the beginning and in the future.
Many insurers also have their own legal teams to help recover the debt.
Who would need Trade Credit Insurance?
We work with a range of clients from several sectors, including manufacturing, food and beverage, construction, logistics, financial institutions, wholesale and retail.
Companies within these sectors need Trade Credit insurance for many different reasons – they might be going through a period of growth, have previously incurred bad debts, have a concern over certain customers or an opportunity has arisen to increase exports in unfamiliar territories.
Trade Credit insurance is suitable for businesses with a turnover of more than £500,000 who offer credit to their customers
How will I know how creditworthy my customers are?
This information can be provided in the form of an insured credit limit that reflects their creditworthiness alongside insurers sharing their knowledge with their customers. In the circumstance that one of your customers is experiencing difficulties, they may also be able to provide valuable insights and market intelligence for you.
For smaller credit balances, insurers allow you to grant your own limits; either from a credit rating agency (for example, Experian, Creditsafe or Graydons) or based on your previous trading experience with the customer. This cover is known as a discretionary limit.
Which insurers do you use?
As an insurance broker, we will approach a number of insurers to obtain quotations. You will benefit from:
- Comparison of quotations from a number of insurers, many of which are only available from an insurance broker
- Comparison of the cover available for your customers
- Support and assistance for the lifetime of your policy and claims, queries and cover changes
- Impartial advice and recommendations on the right policy for your business
Do you provide cover if I trade abroad?
Yes, we provide several different solutions for different sized businesses trading here or abroad.
Will the total of unpaid amounts be recovered?
Insurers will pay 90% of the debt excluding VAT. A minimum excess will apply which is typically £500. However, if the insurer’s legal team is successful at recovering the amount, they will recover 100% of the debt.
How quickly will I get paid?
If the debt is due to insolvency then payments are usually received within 14 days subject to all information being received. If the debt is due to a customer refusing to pay, then there is a waiting period which varies from one insurer to the next but will be between three and six months.
How much will it cost me?
The cost is a very small percentage of your credit sales turnover (typically less than 0.50% of your whole turnover). For example, with a turnover of £2,600,000, you will be charged around £13,000 plus IPT (12%).
The charge is based on your credit sales turnover, the sector of your business, your customers and your previous bad debt history. The minimum cost is usually £3,500.
Please complete our enquiry form for a confirmed quotation.