Trade Credit Insurance: Protect Your Business from Non-Payment
Trading on credit terms carries the risk that your customers may not be able to pay, with insolvency being one of the most common causes. When a business suffers a bad debt, it can have a significant impact, slowing expansion, disrupting cash flow, or even threatening the businessโs survival.
For example, on a 10% profit margin, a business that loses $100,000 due to non-payment would need to sell an additional $1,000,000 worth of goods just to recover that loss. Trade credit insurance not only protects against this risk but also provides peace of mind to directors and business owners, ensuring their cash flow is protected and liquidity is maintained.
Why consider Trade Credit Insurance?
Why consider Trade Credit Insurance?
Preserve Your Profit
Around 40% of a companyโs assets are often tied up in the debtorsโ ledger - a significant part of your business that needs protection. Unlike a bad debt reserve, which doesn't recover lost funds in the event of a customer insolvency or default, trade credit insurance protects your margin on debts.
Safeguard Liquidity and Cash Flow
The immediate impact of a non-payment isnโt just the loss of a customer - itโs the strain on your cash flow, which can be devastating. A credit insurance claim settlement provides an injection of liquid funds, ensuring your business stays on track even if a customer defaults. Itโs like having a virtually unlimited cash reserve at your disposal.
Grow with Confidence
With trade credit insurance, you can expand confidently, knowing potential customer failures are covered. You can also be more aggressive in your sales and marketing, offering extended credit terms and higher credit limits to attract new business without fear of non-payment.
Strengthen Your Credit Management
Credit risk isnโt always predictable. Your customersโ financial position can be affected by a vast range of internal and external factors, unknown to you. With access to NCIโs extensive domestic and international database and real-time credit monitoring services, you can strengthen your credit controls, make more informed credit decisions, and venture into new markets or take on new clients with greater certainty.
Is Trade Credit Insurance Right for You?
Is Trade Credit Insurance Right for You?
Trade credit insurance is suitable for any business that trades on credit terms, across a wide range of industries. Itโs generally most cost-effective for businesses with annual turnover above $2 million, though there are exceptions.
Our specialist trade credit brokers assess your businessโs unique needs, structuring the right policy for you. The most common structure is whole of turnover coverage, which protects all your sales for the policy period, allowing you to claim in the event of non-payment.
How to Minimise the Risk of Bad Debt
How to Minimise the Risk of Bad Debt
While trade credit insurance provides ultimate protection, there are steps your business can take to reduce the risk of bad debt:
- Know your customers - confirm you're trading with the correct legal entity.
- Implement a robust process to assess customer creditworthiness - both by initial credit checks, and by ongoing active credit monitoring.
- Ensure your terms of trade are up to date and agreed upon.
- Set specific credit limits for clients based on clear, risk-based criteria.
- Ask yourself: Would you lend $100,000 to a friend without checking their ability to repay?
Contact us
Contact us
Trade credit insurance is a powerful risk management tool that shields your business from financial losses due to non-payment. It provides security, supports growth, and helps you navigate economic uncertainty with confidence.
Contact Network Insurance Groupโs trade credit insurance experts to learn how we can help protect what matters most to your business.
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Our process
Consult with you to get a clear understanding of your business. We will ask probative questions surrounding strategic, hazard and business risks of your business.
Based on this information we will search the market for the best cover and consider the best options available for your business. We will design a proposal to suit your needs.
Once you have agreed to your risk management plan we will implement and setup your cover.
We pride ourselves in maintaining on going relationships with our clients. We will check in regularly to ensure youโre comfortable with your cover and to ensure youโve had no major change of circumstance.
100% Australian Owned
Why choose Network Insurance Group
Network Insurance Group are a 100% Australian Owned Insurance Broker backed by the Steadfast Group. We specialise in general Risk Management, Workersโ Compensation, Claims Management and Specialty Industry Risks.
Network Insurance Group has a long established track record of financial strength, integrity and delivery for our valued and long standing customers. In trusting Network Insurance Group, our customers benefit from market leading expertise and specialism across a range of diverse industries, products and services.
Our areas of business insurance specialisation
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