Companies are expected to extend credit to their customers in today's business climate, as it enhances purchasing power and creates opportunities that may not have been available otherwise. However, offering credit is a balancing act for most businesses, as just one late payment or a customer insolvency can put stress on a company's cash flow and profitability. Thankfully, businesses-whether they are manufacturers, suppliers, or other types of companies-can protect themselves using trade credit insurance. Trade credit insurance, also known as credit insurance or export credit insurance, is a form of insurance that transfers risk for businesses seeking to protect their accounts receivable against nonpayment. To better understand the coverage and its uses, it's important to review some frequently asked questions regarding trade credit insurance.
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