Trade Credit Insurance FAQ

Answers to the most frequently asked questions about credit insurance.

Credit insurance from Atradius is a straightforward, cost effective and flexible way to ensure you get paid for goods and services you supply. With credit insurance solutions designed for SMEs, Large Companies and Global Businesses, we have a credit protection solution to suit all sizes and types of enterprises. Here is an FAQ to address some of your questions.


 

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What is trade credit insurance?
Credit insurance is a risk management tool that can help protect your company’s commercial accounts receivable from the devastating effects of loss caused by the insolvency or protracted default of your buyers.

Credit insurance coverage is available for both your domestic and/or export customers and provides flexible coverage which can be tailored to meet your needs.

Why should you insure yourself against credit risks?
In the current economic environment, peace of mind is a good reason for credit insurance! We give you the security of knowing that your receivables are protected.

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How can credit insurance work as a financial tool?
Lenders recognize that the insolvency of a company’s key customer may jeopardize repayment of a loan. Credit insurance reduces this risk and may result in more favorable lending terms.

How does credit insurance work as a sales product?
Credit insurance may enable you to sell more goods on credit terms while substantially reducing the overall risk of exposure to nonpayment. It also may enable you to take advantage of peak and cyclical selling periods and to safely expand into new product lines or territories.

How does credit insurance work as an insurance product?
Generally, it is recognized that 20% of a firm’s buyers account for 80% of sales. Credit insurance protects against the catastrophic loss resulting from the insolvency of one of those key accounts.​

How much will it cost?
Premiums usually cost a fraction of 1% of sales and are based on the type of business, annual sales and loss experience.

Must all accounts be insured?
No! The policy is flexible and can be tailored to fit your specific needs. It can cover your entire portfolio or only your largest key accounts...those which would create a catastrophic loss for your company if they became insolvent. You make the decision.

What types of losses are covered?
Your policy covers many loss situations, ranging from bankruptcy to uncollectible accounts.

Why not continue to “self-insure”?
Although some companies have chosen to self-insure in the past, doing so now may cost you more. Under a number of tax codes, businesses can no longer use the bad debt reserve method of accounting to determine tax deductions. On the other hand, credit insurance premiums are tax deductible, allowing you to put the cash you now have in reserves to better use.

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Why sign up with Atradius?
Atradius is one of the largest credit insurance companies in the world. We offer exceptional products with a high level of experience that can give you the confidence of long-term financial stability. Together with our world class partners, Atradius extends a large reinsurance capacity and direct access to more than 240 million buyers worldwide. We are capable of accommodating your multinational needs.

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