What is Trade Credit Insurance

October 19, 2015

Trade Credit Insurance

Generating Client interest in purchasing a trade credit insurance policy requires being able to tell a Client what trade credit insurance does, explain the business challenges the contracts overcome, and why use an agency instead of going direct to an insurer.  Here are answers to some key questions:

What is trade credit insurance:

  • An insurance contract purchased by suppliers in which an Insurer pays a Company when its commercial customer doesn’t. Trade Credit Insurance
  • In special cases, the contract may instead be purchased by the commercial customer and issued in favor of the supplier.

What is the trigger?

  • If a customer has filed some form of bankruptcy and/or — even broader –the customer hasn’t paid for purchased goods and services within 90 days of the invoiced due date.

When do I get paid?

  • General rule is 45 to 180 days after filing a claim. Depends on insurer and customer country.

Why do companies buy trade credit insurance?

  • In most instances, companies are quite happy to have their customer. All their energy goes into quickly delivering the product/services and invoicing Client. There are three 10,000 foot reasons:
    •  Credit insurance is used to increase sales to existing & new customers.
      • In many instances, a customer may request product purchases at $ level substantially more than their visible resources.  Worse, the resources aren’t visible (common globally). Credit insurers ‘cover’ over 80,000,000 companies globally.
  • Credit insurance is used for financing sales to foreign customers and key accounts
    • Offers highest $ amount of credit for financing
    • Unsecured basis (no liens, filings)
    • Inexpensive
  •  Credit insurance is a global cash flow preservation tool to prevent loss or disruption caused by customer defaults/nonpayment and country defaults.

What is Credit Eureka’s value?

  • There are over 20+ insurers, government agencies, and banks globally offering some form of credit insurance. The providers differ significantly in:
    • which and how many customer accounts they can write,
    • what $ amounts they can write for each customer
    • which countries they have experience
    • which industries have experience
  • which contract clauses they offer
    • portfolio vs. single customers
    • triggers
    • cancelability of the customer coverage – at their discretion or at yours
    • timeframe for payout
    • rights of insured

We provide our Clients the most customer credits, for the highest $ amounts, on favorable contract terms, at the most efficient price available in the market.

Companies who engage Credit Eureka receive over 50+ years of collective credit insurance, trade finance, and credit securities experience for corporations and banks. From short term accounts receivable, supply chain financing, commodities financing, international banking, to medium term project financing.

What is the Client’s goal? Get the $ amount on each customer they request, or as close to it as possible. This is the most important piece to the Client. Every $ insured is a dollar less risk to them, a dollar less upfront capital required from their customer, and an additional dollar available to both from their bank lines.

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Dawson Beattie

Dawson Beattie leads CreditEureka as President and founder. He has helped companies navigate international credit markets through nearly 20 years of shifting market conditions. He has helped companies in retailing, mining, technology, life sciences, and agriculture.