Trade credit insurance
A customer who doesn't pay can put your business in real trouble. Trade credit insurance covers that risk. Here's how it works, what it costs, and when it's right for your business.
Book a no-obligation consultation
The first conversation is free, with no obligation.
What is trade credit insurance?
Trade credit insurance protects you against customers who don't pay their invoices. If a customer goes bankrupt or still hasn't paid after several months, the credit insurer pays you back most of the amount, usually 85% to 90%.
For each customer, you request a credit limit up front. That's the amount the insurer is willing to cover for that customer. To set it, the insurer looks at your customer's financials. So you know right away whether you're dealing with a reliable business.
Credit insurance doesn't provide financing, so you don't get your money any sooner. For that, there's factoring.
How does trade credit insurance work?
You request credit limits. For each customer, you ask the insurer for a limit. For small amounts, you can often set it yourself.
You deliver and invoice as usual. You pay a premium on your insured revenue.
What if a customer doesn't pay? You report it to the insurer within the deadline in your contract. The insurer then starts collections.
What if the invoice stays unpaid? After a waiting period, you receive your payout: usually 85% to 90% of the amount, up to the limit.
What are the benefits of credit insurance?
You get to know your customers better. The insurer checks their financials before you deliver.
One bankruptcy won't sink your business. You get most of your money back.
Financing gets easier. Banks and factoring companies lend more against insured invoices.
You can grow with confidence. A new customer or a large order becomes a lot less risky.
What does trade credit insurance cost?
You pay a premium as a percentage of your insured revenue. The rate depends on your industry, your customers, the countries they're in, and your claims history. On top of that, there's usually an annual minimum premium, a fee for each credit limit you request, and a deductible per claim.
We can't give a fixed figure here. Every quote is tailored. But always weigh the premium against what one major bankruptcy would cost you. The math is usually simple.
Credit insurance and factoring
With American Style factoring, credit insurance is always included in the price. With traditional factoring, not always. In that case, you can take out your own credit insurance and assign the policy to the factoring company. That often gets you a lower factoring fee.
To see exactly how that works, read our blog post Factoring and credit insurance: can you combine them? Not sure yet which option suits you? Take a look at the types of factoring.
Is trade credit insurance right for you?
Do any of these situations sound familiar?
One or two customers make up a large share of your revenue. If you lose one, you feel it right away.
You deliver to customers you don't know well yet. You want to know they're reliable before you deliver.
You have customers abroad. An unpaid invoice is harder to collect there.
Your customers pay in 60 or 90 days. That's a long time to carry the risk between delivery and payment.
Still not sure? We'll look at your customers together and tell you honestly whether credit insurance makes sense.
Frequently asked questions about trade credit insurance
Don't see your question? See all FAQs.
You request a credit limit for each customer. If that customer doesn't pay, you report it and the insurer tries to collect the invoice. If that fails, you usually get 85% to 90% of the amount back.
A premium as a percentage of your insured revenue, usually with an annual minimum premium. The rate depends on your industry, your customers, and your claims history.
Yes, if a few customers make up a large share of your revenue. If your revenue is small, the minimum premium can weigh too heavily. In that case, factoring with built-in credit insurance is often simpler.
Credit insurance protects you against nonpayment. Factoring also gets you your money right away. With American Style factoring, you get both.
Want to know if trade credit insurance is right for you?
We'll look at your customers together and tell you honestly whether credit insurance makes sense. If it does, we'll guide your application with the credit insurer, from the first question to the signature.