Trade Credit Insurance
What is Trade Credit Insurance ?
Trade Credit Insurance is a credit risk management solution that safeguards the development of your business, in particular by protecting you against losses due to non-payment of invoices.
What are the features of trade credit?
Key Features policy covers:
No interest charges: Trade credit usually doesn’t incur interest, making it a cost-effective financing option. Impact on credit score: Late payments can negatively impact the business’s credit rating. Flexibility in payment terms: Offers flexibility in managing payment schedules based on cash flow.
What is a benefit of trade credit?
Because payment is not due until later, trade credits improve the cash flow of businesses; they can sell the goods they acquired without having to pay for those goods until a later date. Trade credits also improve your business profile as well as your relationship with your vendors.
Is trade credit interest free?
Trade Credit Interest
Unlike a loan from a bank, trade credit is usually interest free – which means a business only needs to pay back the amount equal to the value of the goods they purchased without any additional fees.
What is trade credit as per RBI?
Trade Credits (TC) refer to the credits extended by the overseas supplier, bank, financial institution and other permitted recognized lenders for maturity, for imports of capital/non-capital goods permissible under the Foreign Trade Policy of the Government of India.
What is risk covered under trade credit insurance?
It covers: Extended payment defaults (late payments). Bad debts arising from customer insolvency. Political risk: non-payment resulting from political or climate-related events, currency restrictions, interruption of trade or expropriation.
What is not covered under insurance?
Trade Credit Insurance doesn’t cover situations where payment issues arise due to disputes over the quality of goods or services provided. If your buyer refuses payment due to dissatisfaction with your products, this typically falls outside the scope of coverage.
