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Benefits of Trade Credit Insurance

Trade Credit is vital to the commercial world as it allows businesses to receive goods or services in exchange for a promise to pay. The protection offered with Trade Credit Insurance can do more than just protect your receivables as it can assist you in expanding into new markets, and thereby increase revenue. By enhancing your deal flow and protecting your Balance Sheet, Trade Credit is an essential insurance coverage that ensures that buyers and sellers can do business with confidence.

Whether with domestic or foreign markets, Trade Credit coverage provides sellers with the accounts receivable protection needed to safeguard against political risk events, such as changes to import and export regulations and nationalization, foreign currency shortages or restrictions, contract termination, and contract frustration.

5 Benefits of Trade Credit Insurance

1. Bad debt protection

Trade Credit Insurance provides insolvency protection for sales made on credit terms. The protection covers the unpaid credit balance from sales made to approved customers. Ultimately, it is protection against non-payment arising from bankruptcy, defaults and in some cases political risk.

2. Sales Growth

Trade Credit Insurance can boost sales by offering clients and prospects more favorable credit terms, while eliminating costly letters of credit. Moreover, businesses can enter riskier markets and new markets, allowing for growth with better terms.

Trade Credit Insurance gives businesses the confidence to expand their credit horizons and sales on open credit to new and existing customers.

3. Bank financing

Banks will typically offer favorable lending terms for businesses that use Trade Credit Insurance. Banks understand that those companies have access to professional portfolio monitors who track their customers’ ability to meet their financial obligations, as well access to collection services.

4. Cash flow and loss mitigation

Trade Credit Insurance, at its core, protects and preserves a seller’s cash flow, and earnings. This insurance provides cash flow relief, as when a claim is filed the insurer steps in and pays the seller when the buyer cannot pay.

For example, a company with a profit margin of 6% that experiences a nonpayment of $50,000 would need to generate an additional $ 883,333 equivalent sales to make up for that single instance of nonpayment.

5. using trade Credit to increase profits

If your company wants to expand sales with current customers but is uncomfortable with offering a higher internal credit limit, you can turn to your Trade Credit Insurance to increase credit limits, thereby growing your revenues and deliver more profits.

With higher limits, businesses can capture incremental gross profit and those benefits could be multiplied across a portfolio of its customers.


Do not leave yourself vulnerable to Trade Credit Insurance as the time commitment to explore the value of the product is minimal, particularly when compared to the potential cost savings and the above-mentioned benefits.

If 2020 has taught us anything, it is the impossibility to predict the future. The good news is the protection afforded to you with Trade Credit Insurance provides you with a proven liquidity tool that will be there for you when needed.

Give us a call, and rest assured that you are dealing with an industry specialist in transactional coverages, as every company is unique and deserves a tailored solution.





Martin J. Delaney

Transactional and Surety Leader


Martin joined Iridium as the Transactional and Surety Practice Leader in 2020. Martin brings a diverse background to his role combining his insurance knowledge of financial risk management, structured surety solutions, and trade credit with expertise in the financial and energy sectors that includes product development.