The economic consequences of COVID-19 are being felt strongly across all of our industries. With disrupted supply chains and the funds of customers being exhausted, solvency margins and trade credit arrangements are going to be significantly tested.
Trade Credit is a form of insurance cover that is therefore sure to enter the spotlight in the coming months, as businesses look to protect themselves from cash flow issues indirectly associated with COVID-19.
What is trade credit insurance?
Trade credit insurance provides cover for businesses if customers who owe money for products or services do not pay their debts, or pay them later than the payment terms dictate. This could result from businesses not being able to pay for goods and services delivered as the result of COVID-19.
Is there any business cover against suppliers going insolvent?
Trade credit insurers do not provide cover for loss of production volume or the insolvency of a supplier, only the failure of a customer to pay for purchased goods. It is primarily insurance to cover the potential failure of a customer to pay for goods and services rendered in the event of insolvency or in the event of late payment.
Is my business covered by insurance against delays in payments across the supply chain?
Trade credit insurance provides coverage for delayed payments, ensuring that late payments do not put your company under financial strain.
Can I still purchase trade credit insurance?
Yes, insurers continue to offer cover for the sale of goods and will provide you with advice and guidance to ensure that you are protected against the failure of customers to pay for goods and services that you have supplied.
What if I am trading with a region affected by coronavirus?
Insurers will assess trade on a case by case basis for those countries/regions that are experiencing the most severe impact of the virus. Insurers may set specific conditions or credit levels for such trade.
If you would to discuss trade credit insurance for your business please get in touch with your usual Hayes Parsons contact or email us on [email protected]
