Casey Johnson of Hylant provides the ins and outs of trade credit insurance.

The global trade credit market continues to grow with increased international business opportunities and carriers making trade credit more accessible to the market. You may be asking – what is trade credit insurance? Trade credit insurance (TCI) insures your accounts receivables against losses due to bankruptcy, unforeseen insolvency, or protracted default. But, trade credit insurance is more than just insurance. Once your A/R is insured, it is a secured asset, and can be used to leverage many ROIs.

Why do companies acquire a trade credit insurance policy? Trade credit can help build a healthy pipeline of new revenue, increase access to capital, prevent a catastrophic loss, and strengthen an organization’s balance sheet. Here are the top four motivating factors for trade credit Insurance.

Lending/Finance Support: TCI is a tool that is used to support the financing activities of an insured. It is common to see exclusions in a borrowing base for foreign A/R, extended terms, high concentrations, and other common exclusions. TCI is a vehicle to include more of the total accounts receivables into the borrowing base. The lender is the first payee and would be endorsed on the policy through the lender beneficiary endorsement.

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