Credit Insurance and Accounts Receivable Insurance

Asset Based Lending

Asset-based lending is an appealing financing option for asset-rich companies looking to maximize their borrowing capacity. Often, your accounts receivable comprise a significant portion of the total assets included in your borrowing base.
Common uses of Asset-Based Lending include:

Working with a specialist can help you determine the best custom solution for your unique needs

A credit insurance policy can substantially increase your borrowing capacity under an Asset-Based Lending facility, especially if export receivables are part of the borrowing base.
Asset-based lenders will typically request active monitoring of your accounts receivable (regular aging statements), and also may require regularly scheduled audits of your assets used as collateral for the loan. With most asset-based lending facilities, you own and maintain control over your receivables.

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Frequently Asked Questions

A. No. Credit life or credit disability insurance is obtained by individuals to help pay debts in case of loss of income. Business credit insurance (also known as trade credit insurance, export credit insurance, or just credit insurance) is used to reduce the risk of non-payment in B2B transactions and is obtained by the company offering the goods or services, rather than the company receiving the goods or services.

A. There is no additional fee to use a broker. By law, you will pay the same rates for the coverage you choose, whether you use a broker or work directly with the insurance company.  However, a broker can be a valuable resource, helping you evaluate quotes, implement your new accounts receivable insurance policy, and navigate mandatory reporting requirements. They may also assist with future claim submissions.

A. The short answer is yes — because things can change. Business insolvency is predicted to increase due to global events. Evaluating the risk of non-payment requires considerable data collection and analysis. Your credit insurance broker can help you figure out the right amount of coverage for your situation.

A. Trade credit can help you grow your business. When a business is able to purchase goods or services with trade credit, it frees up cash flow, making it a source of short-term financing. This practice allows the business to potentially expand its market or customer base without the negative impact of running out of cash, potentially putting it out of business. 

Many trade credit agreements incentivise paying early with a discount, so the business is able to decide whether to pay early at a cheaper price or to take longer to pay at full price based on both money coming into the business and other expenses that need to be paid. 

However, it also comes with the inherent risk of non-payment. Accounts receivable insurance can mitigate this risk by protecting you from losses due to customer default.