Trade Credit Insurance

Trade Credit Insurance – What is it?

It is essentially protection against bad debt. CPR Insurance Services can provide Trade Credit insurance solutions, providing a range of domestic and export policies that can be tailored to suit a business and their risk management needs whether they are a local, regional or global company.

Who needs Trade Credit insurance? 

If a registered business is selling its goods and services on credit terms (eg offering 30 days to pay) then it is vulnerable to bad debts and should consider the protection of a trade credit policy. Benefits of Trade Credit insurance include: 

  • lost working capital is quickly replaced
  • policies can be assigned to a financier to increase borrowing capacity
  • our Insurers have an international information network helps provide an early warning of potential payment difficulties
  • policy holders are provided with a range of credit management tools to improve cash flow.

What does Trade Credit insurance cover? 

Trade Credit insurance covers the non-payment of trade debts following the event of insolvency (eg receivership, liquidation, and bankruptcy) and protracted default. If the trade debt is from an export transaction, the additional events of contract repudiation and various political risks can be included.
If a business sells goods and services on credit terms, a substantial percentage of their working capital is probably tied up as money owed from their customers. Trade Credit Insurance protects against these assets becoming bad debts. Claims are payable 30 days from our receipt of the Confirmation of Debt from the insolvency practitioner in charge of the failed debtor. 

Does Trade Credit assist my credit management? 

Trade Credit policies should be designed to complement and support good credit management and help you to trade with confidence. They will respond promptly to increases in credit limits and be available to assist if a customer slows in paying an account. Some Trade Credit Insurers provide assistance with the collection of debt when a customer doesn’t pay on time with preferred terms available from selected collection agencies.

What types of Trade Credit insurance are available? 

Insurers offers a range of products that can be tailored to suit each business and countries. We can advise details of various products in each market. 
Can a business insure sales to members of the public? 
No, Trade Credit insurance is for business to business transactions such as manufacturers selling to wholesalers, wholesalers to retailers or contractors to builders. 

How much does it cost? 

Premiums can be calculated as a percentage of turnover or for some product types, are offered on a fixed fee basis. Minimum turnover will generally need to be between $1,000,000 and $3,000,000 to be considered. Factors including industry, country of policyholder and buyer categories such as manufacturers, wholesalers or retailers, will influence the premium charged. However premiums start from approximately $13,000 plus charges for GST and Stamp Duty (if applicable) depending on the Insurer.

What information is required to obtain a quote? 

To obtain the most accurate quote for your business, you need to complete a proposal form. The proposal seeks information about the type and location of the larger debtors, the length of the terms of payment, history of bad debts and the credit control processes. 

Who can help? 

An insurance broker's role is to act as your representative and work in your interests, seeking the best cover at the best price for you with their skill, market knowledge and experience. Call a good one. 

Call CPR Experts who will save you

"Brokers should offer Trade Credit to every client"

Latest News

Illegal or unsuitable cladding now a big issue

Why we have laws, regulations and Australian standards? Because some people just do the wrong thing all for the sake of making money. The cladding issue is the subject of 4 Corners program on the ABC.

We are already seeing Insurance policies now placing exclusion endorsements into their policies excluding and claims relating to illegal cladding. We are seeing Governments demanding Audits of all existing buildings above a certain height. There are accusations of Builders taking other short cuts such as on Wiring, Pipes and sprinkler systems. 

The question is, who is to blame? Who will take responsibility?

read more

Small business in NSW

Right after the NSW Government have reimposed Fire Service Levies, they have at least made an effort for small business. The government has announced it will abolish stamp duty on a number of policies taken out by a small business. This is an important change.

What is a small business? In order to gain the exemptions, the business must be a small business for Capital Gains Tax Purposes for the income year in which the insurance is effected or renewed. A small business for CGT purposes is: “an individual, partnership, company or trust that is carrying on a business, and has an aggregated turnover of less than $2 million.”

read more