Frequently Asked Questions
What does credit insurance do?
Accounts Receivable (aka “Trade”) Credit Insurance pays suppliers for customer nonpayment due to customer insolvency, simple nonpayment, and customer nonpayment due to local sovereign risks.
The purpose of trade credit insurance is to inexpensively facilitate new business between suppliers and customers domestically and abroad — without tying up capital — yet protecting cash flows, strengthening credit management, and improving $ financing amounts available to suppliers and customers from lenders.
Who uses it?
Companies selling on credit terms domestically & internationally, along with companies seeking to increase the amount of $ working capital offered by their banks without pledging additional security/collateral. Companies who buy credit insurance are typically exporters, manufacturers, commodity firms, wholesalers, and service providers trading domestically and globally. Banks also purchase to support their factoring, trade finance businesses.
Can private companies be insured? What about foreign companies?
Yes. To both. Over 100MM companies globally are ‘covered’ by insurance market, with over $3T in sales and financings insured annually. For perspective, you would need 1700 WSJ newspapers to list all the ‘covered’ companies. Comparatively, listing the NYSE companies takes … one page of the WSJ.
Do all insurers cover the same companies? At the same $ amounts? For same price?
They do not. Our Clients engage crediteureka to sort this out for them.
Are there exclusions?
Few. It excludes the usual business transaction carve outs; disputes (not related to insolvency), fraud, and sales to U.S. government (US govt. receivables, unless special arrangements are made.