Why Trade Credit Insurance?
Each time you grant credit to your customers, your company is exposed to the risk of non-payment. There is a greater chance that a business will experience a loss within its accounts receivable than any other asset. With an average of 40 percent of a company’s assets in the form of trade debts, accounts receivable are a critical component of your balance sheet, directly affecting cash flow and profitability. Yet while you insure your company against property loss
, liability or other unpredictable, high-exposure events, you’re leaving one of your most valuable – and vulnerable – assets open to loss. Accounts receivable coverage through trade credit insurance offers a safer way to do business.
Trade credit insurance, also called accounts receivable insurance or trade credit risk insurance, is a financial tool that manages both commercial and political risks
that are beyond a company’s control. It is protection against your customers’ failure to pay their trade debts. This can happen when your customer becomes insolvent or fails to pay within the agreed upon timeframe.
> Top 10 Reasons to Insure your Accounts Receivable
What Makes Euler Hermes Credit Insurance Unique?
More important than mere risk transfer, a commercial credit insurance policy with Euler Hermes is an investment in a partnership with us. We help you leverage our knowledge and financial stability to realize several valuable benefits that can offset the cost of your policy many times over – even if you never make a claim.
Investing in a Euler Hermes trade insurance policy enables you to:
- Grow sales safely, domestically and abroad, to new and existing customers
- Protect your business from the risk of customer default and catastrophic loss
- Improve the efficiency and results of your credit management department
- Gain a competitive advantage in exporting by offering safe, open terms overseas
- Reduce bad-debt reserves
- Obtain greater access to bank financing, often at more favorable rates
As a virtual extension of your company, Euler Hermes provides the insight and resources you need to manage, maximize and protect your receivables
. When you initiate a business credit insurance policy, our experts analyze your customers’ creditworthiness and financial stability. We then assign them specific credit limits; these are the amounts we will indemnify if those insured customers fail to pay. Our underwriters are industry specialists who will work closely with you to deliver in-depth credit analysis and ongoing account monitoring to provide early warning of potential credit risks before they become a loss. With thousands of policyholders from small businesses
to large multinationals
, Euler Hermes can show you how our accounts receivable insurance coverage delivers the value that matters to your company.
Knowing your customers