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Trade Credit Insurance

Trade Credit Insurance

Credit insurance is an easy way to safeguard your company's profit margin. Our Accounts Receivable Insurance (ARI) protects your sales against a wide range of risks and ensure that you get paid for U.S. and international sales, even if your customer can't pay.

  • Protect your profit margin again non-payment
  • Stabilize your cash flow
  • Increase sales

Free up cash flow

When your bank knows that you'll get paid for a U.S. or foreign contract - even if your buyer defaults – the bank may have more confidence to provide you with increased cash flow or forego the usual requirements for additional collateral.

Grow your Business with confidence

ARI can be used to help free up funds to promote your business in new markets, pursue new customers, keep your operations and sales cycles running smoothly, and provide favourable payment terms to your customers

Protect your sales  

ARI protects you for up to 90 per cent of your losses resulting from non-payment due to a wide range of risks, such as:

  • A customer’s bankruptcy or default on payment
  • A customer’s refusal to accept the goods as contracted
  • Contract cancellation
  • Payment delays caused by blocked funds or transfer difficulties
  • Hostilities in a customer’s country
  • Cancellation or non-renewal of export or import permits

Credit Concerns

Bankruptcies used to be shameful, now it’s a strategic tool used by customers to decide when to shed creditor debt and to force their senior secured lenders, junior secured lenders, and mezzanine lenders to continue to provide capital.  For challenged companies, it’s no longer a question of “should we”, but rather “When will we... for our best benefit”.

Many companies know that the cost of litigation and pursuit for unsecured receivables is far too exorbitant, unless the amount is substantial (over 100K in the US, and over 250K in foreign markets).  As such, some companies will simply default on the credit, knowing there’s little that can be done.  This generally happens when a competitor comes forward with a better pricing option.  We all want to sell on value, but sometimes our customer’s don’t buy on value.

For small business 

  • Use it to help make the next sale and get into new markets.
  • Stretch your working capital and give you more money on your bank line of credit.  Most bankers in Canada don’t know that they can leverage this insurance to lend you money on receivables at 90%, even if the receivables are from outside of Canada.
  • If you’ve signed a contract and will be incurring costs up-front before receiving a milestone payment and are worried about contract cancellation for a variety of reasons (end buyer cancels order, your customer changes their mind, they receive a better price from a competitor and want to break the contract in favour of them).  Don’t be left holding the bag.

Mid-market 

  • Use it as a tool to bring breadth, expertise, and access to relevant customer information in your credit management group.
  • Use it as an outside team to reduce the push-pull between sales and the finance team which extends credit to customers.
  • Use it to increase margining on A/R to 90%, and to ensure that eligible A/R doesn’t “Fall off” after 90-days, if a customer is late in paying.

Large companies 

  • Use it to adjust provisions for bad-debt.
  • Structure tax effective securitization and factoring structures.
  • Provide confidence to the Shareholders and Board that risks are being thoughtfully taken and there is good governance in place surrounding the extension of credit.
  • Enterprise Risk Management process includes critical failure of key customers or end users, use credit insurance to mitigate this risk.
  • Outsource a portion of your credit risk management, so you can focus your team on the markets where you are most comfortable assessing credit risk.
  • Consider the full-cost of financing through your supply-chain.  Financing costs from suppliers are being pushed through to you in terms of higher quotes.  Consider a supply-chain solution which allows suppliers to securitize A/R against you.
  • You have currency conversion or transfer risks in the markets you are operating in, where you’re concerned about the ability to repatriate the cash or the receivables due to illiquidity in the currency market or government intervention in the local FX market.

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