Trade credit insurance is useful if a customer fails to pay, trade credit insurance safeguards your business. In many instances, credit insurers may cover up to 90% of the debt.
Insurance coverage usually applies to customer bankruptcy and political risks, although it can extend to many other causes of non-payment as agreed in the policy terms. It gives a business that safety net just in case a customer cannot pay for a large order and decreases the risk of a large financial loss. Losing a payment from a large order or a big product can set back a business and is a large risk to the cash flow.
With trade credit insurance, the policyholder knows their business is protected against both commercial and political risks that are beyond their control knowing that money owed to them will be paid.