Business credit insurance covers a company’s accounts receivable, which typically represent more than 40% of a company’s assets. This protection insures against unexpected bad debt losses outside of the insured’s control due to commercial and/or political risks, such as insolvencies, protracted default, repudiation, acts of war and government regulation or restrictions. Commercial Risk

• • Insolvency– Includes court protection such as Chapter 11 in the U.S. or Companies’ Creditors Arrangement Act in Canada
  • Protracted Default– Unpaid invoices 90 days past due date
  • Repudiation– Refusal to take up goods shipped and delivered as per contract

Political Risk

• • Inconvertibility
  • Contract frustration as a result of government action
  • Public Buyer Default
  • Act of war (other than wars between the five super powers: China, France, Great Britain, Russia and the United States)
  • Government regulation or restrictions

Why Insure Accounts Receivable?

Accounts receivable are often a company’s only uninsured asset, yet they are one of the most vulnerable to loss and are more likely to be affected by business cycles.  They provide the cash flow – the lifeblood – for a business and usually represent the highest cost to maintain (funded through bank borrowings and cost of delinquencies).

Benefits of Credit Insurance

• • • • Reduce your credit risk and improve financial planning by:
        • Strengthening your balance sheet to avoid unexpected losses
        • Securing your company’s cash flow by reducing bad debt
        • Forecasting bad debts more accurately through buyer monitoring
        • Using credit insurance in conjunction with your risk management practices
      • Safely expand sales, both domestically and abroad
      • Allows your company to compete and extend credit
      • Gives a business the ability to extend credit higher than bank lending, and it is insured
      • Protection from profit erosion from late payments and bad debt losses from buyers who are unable to pay
      • Supports credit management practices
      • Enhances financing while reducing the costs of borrowing
      • Taps into the extensive international risk database for over 160 countries backed by knowledgeable underwriters
      • Covers any work-in-progress to protect against the insolvency of a buyer for which you produce customized goods