Trade Credit is an insurance product offering companies the option of protecting their cash flow as well as their debtor’s book against bad debt.
Companies have a responsibility to all stakeholders in their business to ensure good corporate governance. As their debtor’s book is usually one of the largest assets, cover should be taken to protect the company and its stakeholders against an unforeseen bad debt. Purchasing this product allows one additional insight into the market and any specific challenges, these might include delinquent debtors, debtors taking extended payment terms and the assessment of your debtor’s buying ability and trading levels. Furthermore, the insurers assist with collection of overdue accounts and are involved in mitigation and salvage of bad debts. The payment of claims provides additional benefits of smoothing your cash flow and protecting your business from catastrophic losses.