Trade credit insurance for businesses

Trade credit insurance: protect your business

As a business owner, you often supply on credit. But what if a customer does not pay? Trade credit insurance protects you against this risk.

What is trade credit insurance?

Trade credit insurance protects you against the risk of customers (debtors) failing to pay. If a customer goes bankrupt or cannot pay, the insurance covers a large proportion of the amount owed to you.

How does it work?

Step 1: Take out a policy

You take out a policy with a credit insurer. You specify which customers and/or turnover you want to insure.

Step 2: Credit limits

The insurer assesses your customers and assigns credit limits. This is the maximum amount you can supply to that customer with insurance cover.

Step 3: Supply

You supply goods or services to your customers as usual.

Step 4: Monitoring

The insurer monitors your customers' creditworthiness. You are alerted if it deteriorates.

Step 5: Make a claim

If a customer does not pay, you report this to the insurer. After the waiting period (usually 3-6 months), you receive the payout.

What is covered?

Covered:

✅ Insolvency (bankruptcy, suspension of payments)
✅ Protracted default (prolonged non-payment)
✅ Political risks (for exports)

Not covered:

❌ Disputes over delivery
❌ Payments still within the payment term
❌ The uninsured portion

Payout percentage

Credit insurers do not pay out 100%. Typical payouts:

Standard: 75-90% of the amount owed
Premium: 90-95% of the amount owed

The uninsured portion encourages you to assess customers critically yourself too.

Cost of trade credit insurance

The premium depends on:

Your sector
The turnover you insure
Your customers' risk profile
The percentage covered

Guide:

Premium: 0,1% - 0,5% of insured turnover
For €1 million in turnover: €1.000 - €5.000 per year

Major credit insurers

The major players in the Netherlands are:

Atradius: The largest in the Netherlands
Euler Hermes (Allianz Trade): Strong international presence
Coface: Focus on SMEs
Credendo: Specialises in exports

Benefits of trade credit insurance

Financial:

Protection against non-payment
More stable cash flow
Easier access to finance (banks place a higher value on insured receivables)

Operational:

Professional credit assessments of customers
Risk warning system
Debt collection services included

Strategic:

Enter new markets safely
Offer customers higher credit limits
Focus on growth rather than risk management

Drawbacks and considerations

Premium costs
Not all customers are accepted
Administrative burden
Limits may be reduced

Alternatives to trade credit insurance

Alternative	Advantage	Disadvantage
Advance payment	No risk	Customers do not want it
Letter of Credit	Bank guarantee	Complex, costly
Factoring	Immediate funds	Higher costs
In-house risk management	No premium	Full exposure

Is it right for you?

Trade credit insurance is worth considering if:

Your turnover is > €500.000
You supply on credit
You have a small number of large customers
You export
You want to grow while limiting risks

Tips when taking out cover

Compare several providers: Premiums and terms vary
Read the small print: What are the exclusions?
Understand the limits: How are they determined?
Ask about debt collection: Which services are included?
Check the claims procedure: How quickly are claims paid?

Conclusion

Trade credit insurance can be essential to the continuity of your business. It costs money, but protection against major losses from non-payment can make that investment well worthwhile. Assess your risks and weigh the costs against the potential losses.

Primary source	What is it used for?
KVK (Dutch Chamber of Commerce) — checking business partners	Company identification and checks on business partners.
De Rechtspraak — Central Insolvency Register	Official insolvency notices and available public reports; check the relevant entity and the date of the court ruling.