Protect your business against bad debt
Trade credit insurance, sometimes referred to as debtor insurance, commercial credit insurance, or receivables insurance, safeguards your business from the risk of customers not paying for goods or services provided on credit, typically due to insolvency or insufficient funds.
No matter how efficiently you manage your business, the risk of bad debt remains ever-present. Even your most dependable clients can experience unforeseen financial challenges, leaving your business vulnerable to unpaid invoices. Accounts receivable often represent 30-40% of a company's balance sheet, making it one of your most significant assets. Just as you safeguard your vehicles, equipment, and other business property, it's only logical to protect your receivables as well. Trade Credit Insurance offers a strategic solution, providing coverage for outstanding debts and helping to shield your business from potentially serious financial losses, whether you’re a small business or large enterprise.
What is Trade Credit Insurance?
Managing cash flow is critical for any business, but when customers delay or default on payments, it can put your working capital at serious risk. While small bad debts may be manageable, a major loss due to insolvency or non-payment could disrupt operations and impact long-term growth. Trade credit insurance acts as a financial safeguard, allowing businesses to maintain operations and cashflow even if a customer defaults or declares bankruptcy.
What does Trade Credit Insurance cover?
Our trade credit insurance policies are comprehensive and tailored to meet your needs and budget. Your entire credit portfolio can be covered, including domestic and export customers. Our trade credit insurance policies include the following:
Unpaid invoice collection
Experienced debt collectors will manage the recovery of your unpaid invoices covered by the insurance policy, both within Australia and internationally.
Regular creditworthy checks on your customers
Our expert team of insurance brokers can help you find a competitive, cost-effective insurance solution to help protect your financial future.
Cash-flow protection
If collection efforts are unsuccessful, you’ll be reimbursed for up to 90% of the outstanding amount.
Benefits of Trade Credit Insurance
Beyond protection from bad debts, trade credit insurance offers a range of strategic advantages that can strengthen your operations, boost growth potential, and improve financial resilience.
Increased buyer confidence:
Demonstrating that your business has protected its cash flow and long-term solvency can reassure potential clients that you are a stable partner, capable of supporting them throughout a project or ongoing partnership.
Improved cash flow:
With more cashflow available, and less need for cash reserves to cover bad debts, businesses can reinvest back into the business supporting business growth.
Enhanced access to finance:
Having trade credit insurance can make a business more attractive to lenders and potentially lead to better financing terms.
Expanded sales capacity:
Debtor insurance allows businesses to trade with confidence and take on more clients on credit terms.
Improved credit control process:
Introducing a structured framework around your receivables encourages consistent credit checks, documentation, and follow-up on overdue accounts.
Which businesses need Trade Credit Insurance?
The risk of debtor insolvency or non-payment is an inherent aspect of conducting business. Trade credit insurance is often seen as complex or primarily suited for large or multinational corporations. However, it is a vital tool for ensuring the continued success of small businesses too. Businesses of any industry or size that sell their goods and services on credit terms should consider trade credit insurance. Such industries include agriculture, building & construction, electrical, textiles, manufacturing and wholesaling, just to name a few.
No matter how well you believe you understand your customers, you can never be certain of their financial position. If one of your customers becomes insolvent, experiences cash flow challenges due to non-payments from their own customers, or loses support from their bank, it can trigger a domino effect that significantly impacts your business in ways you can’t always predict.
Small Business:
Trade credit insurance provides small and medium-sized businesses (SMEs) with the protection needed to confidently extend credit to customers, helping safeguard cash flow and reduce the risk of bad debt, which can have a disproportionately large impact on smaller businesses.
Large Companies:
For large companies, trade credit insurance offers a strategic risk management tool, enabling them to mitigate the financial impact of insolvencies or non-payment across a diverse customer base, ensuring continued stability and growth.
Multi-National Companies:
Multi-national companies benefit from trade credit insurance by securing their receivables across multiple markets, including export transactions, protecting against risks in varying economic climates, and helping to maintain global cash flow despite regional financial challenges.
Specialist Trade Credit Insurance Broker
Coverforce is one of the few insurance brokers in Australia that have a specialist in-house Trade Credit Insurance team. With decades of experience behind us, we understand the unique challenges Australian businesses face in today’s economic climate. With tailored solutions designed to safeguard your business against bad debt, customer insolvency, and non-payment, we'll help protect your receivables, improve cash flow, and confidently manage credit risk in both local and international markets.
To learn more, contact us at tradecredit@coverforce.com.au or call 02 9376 7863. Alternatively, simply fill out the form below to request a quote.
* We can provide a same day quote for SMEs with an annual turnover less that $15M.
Request a QuoteFrequently Asked Questions
A trade credit policy is a type of insurance that protects businesses against the risk of non-payment by customers due to insolvency or protracted default. It helps secure cash flow and manage credit risk.
We tailor each policy to suit your budget by adjusting the level of coverage, ensuring that trade credit insurance remains accessible and cost-effective for businesses of all sizes.
Insuring against credit risks protects your business from bad debts, helps maintain healthy cash flow, and provides peace of mind when extending credit to customers.
Trade credit insurance works by reimbursing a percentage of unpaid invoices due to customer insolvency or non-payment. It strengthens your credit control process and can improve access to finance by securing receivables.
An example of trade credit is when a supplier delivers goods to a customer with payment terms of 30 days. The customer receives the goods upfront and pays the invoice a month later.
Insurance for bad debt is called trade credit insurance, but also referred to as debtor insurance, commercial credit insurance, receivables insurance or business debt insurance. It covers unpaid invoices caused by customer insolvency or non-payment within the agreed terms.
