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Without Credit Insurance, Who’s Watching Out For What You Missed?

A large national money center bank, through their Asset Based Lending unit, had a borrower that had a major concentration (a $10 mil exposure on a $40 mil A/R portfolio) with a single buyer.  After determining that single debtor credit insurance coverage was not available on the buyer, the borrower agreed to provide a greater spread of risk by including all their unquestioned buyers with exposures in excess of $1,000,000.

How credit insurance helps business owners

Trade credit insurance is a financial tool which manages both commercial and political risks that are beyond a company’s control. Balance sheet strength is ensured, cash flows are protected, and loan servicing costs, and asset valuation are enhanced. It also allows businesses to feel secure in extending more credit to current customers, or to pursue new, larger customers that would have otherwise seemed too risky, significantly reducing the risk of entering new markets.