For creditors looking to protect themselves from buyer defaults, trade credit insurance is a key risk mitigation tool. This type of policy is designed to provide protection – subject to conditions – against non-payment for goods or services sold on credit terms. To fully leverage trade credit insurance, businesses should follow best practices: report overdue accounts on time, foster transparency between customers and insurers, and regularly review credit limits to align with evolving exposures.

In addition to payment protection, trade credit insurance offers benefits such as: Confidence to extend credit: supporting growth by enabling businesses to work with new or overseas customers who might otherwise be deemed too risky. Enhanced access to funding: increasing banks’ willingness to lend to insured businesses, often at more competitive rates. Ongoing monitoring: insurers monitor customer creditworthiness and assign credit limits based on exposure, helping to provide peace of mind for policyholders. Proactive insights: insurers provide early warnings of financial instability among buyers, enabling businesses to act before issues escalate.

Trade credit insurance is a valuable risk mitigation tool in today’s uncertain economy, especially in the face of insolvencies. Credit insurers can assist with debt recovery efforts, even for uninsured invoices, making it particularly useful for businesses navigating insolvency processes. With this coverage, companies can offer more competitive credit terms to customers without the fear of default, strengthening business relationships while staying protected. Trade credit insurance can also be tailored to specific industry risks, such as those in construction, retail, and manufacturing - sectors heavily impacted by insolvencies in Australia.