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Many companies deals on credit terms and it is not unusual to find themselves facing an insolvent customer who could not pay. Such bad debts not only cause a reduction in profit but
What type of coverage can you get?
Trade Indemnity Insurance is not a luxury:
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For most companies trading on credit, the total annual bad debt is more than enough to pay for the Trade Indemnity Insurance which covers their debtors to the preset credit limit approved by the insurer. |
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The insurer checks and monitors your existing and potential customers’ credit ratings and will only approve cover for transactions with those who have satisfactory financial standing. This is an extra bonus as then you can identify those good customers. |
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If you have just a handful of large customers, it is vital that your business is protected if any one of them fails. |
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In maintaining a Trade Credit insurance your company will need to adopt good credit control practices and thereby reap the benefit of better financial disciplines. |
Are you trading within the “preset credit limit”?
Each of your customers will be given an individual credit limit and you are covered for as long as you trade within those credit limits already agreed to by the insurer.
What type of coverage do you have?
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The insurance will cover you from bad debt arising out of insolvency (of your customers) or late payment. |
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Whole turnover covers your whole business up to the preset credit limit. |
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Critical customer covers your trading with certain specified customers who are under threat from insolvency |
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Specific risk covers you on a single contract or a single customer |
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Export credit covers you for non-payment of overseas customers |
Common exclusions and limitations
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