Trade Credit Insurance

Maintaining a healthy cash flow is paramount for any Ontario business. However, unforeseen customer insolvency or extended payment delays can wreak havoc on your financial stability. Trade credit insurance, also known as accounts receivable insurance, offers a comprehensive solution for Ontario businesses seeking to mitigate these risks.

Simplify the process of finding the right trade credit insurance policy with KASE Insurance, one of the top insurance brokerages in Ontario. Our expert team is dedicated to protecting your assets and helping your business grow. We understand the challenges encountered by various industries, like construction, manufacturing, and professional services. This knowledge allows us to tailor our services to your needs and find the perfect policy that protects your cash flow and business from bad debts.

What Is Trade Credit Insurance? 

Trade insurance serves as a critical risk management tool for Ontario businesses. It functions as a safety net specifically designed to protect your accounts receivable from bad debts. It’s basically like an insurance policy for your income, protecting it from possible losses caused by existing customers going bankrupt or being late with payments.

If a customer does not pay an invoice, trade credit insurance covers your company for a set amount of the insured amount. This financial protection lessens the damage to your cash flow, giving you more confidence to make smart financial planning decisions

With accounts receivable insurance, your Ontario business is safe from this risk, ensuring a safer financial future.

Why Is Trade Insurance Important? 

Unexpected events can ruin even the best-laid business plans in today’s market. For Ontario businesses, accounts receivable insurance is a great way to manage risk and gain several important benefits, including:

  • Protection Against Non-Payment: Protect your company from bad debts due to customers going bankrupt, paying late, or non-payment. This guarantees a steady cash flow, stabilizing your business and reducing overall financial stress even if a customer defaults.
  • Increased Business Growth: With the security of insured receivables, businesses can confidently extend credit to new clients, expanding their customer base and driving sales.
  • Enhanced Financing Options: A trade credit insurance policy can improve creditworthiness and lenders are more likely to offer favourable terms when accounts receivable are insured. This provides increased liquidity and the ability to invest in growth opportunities with confidence. 

Importance of Trade Credit Insurance for Small Businesses 

For Ontario’s small businesses, the financial impact of a single unpaid invoice can be particularly severe. Small businesses often depend on a smaller pool of customers to maintain profitability, which makes them more vulnerable to bad debts and unexpected cash flow disruptions.

Trade credit insurance for small businesses offers a vital safety net by:

  • Reducing Risk: Expand your customer base confidently without extensive credit checks.
  • Covering Unexpected Issues: Get reimbursed for a portion of unpaid invoices if a customer faces financial hardship.
  • Providing Growth and Investment Support: Free up cash flow to reinvest in your business and pursue new opportunities.

A business owner calculating invoices for accounts receivables

What Does Trade Credit Insurance Cover? 

Here are a few examples of the kinds of risks that Ontario companies can mitigate with the help of accounts receivable insurance:

  • Customer Insolvency: Protection if a customer fails to fulfill payment obligations due to bankruptcy, insolvency, or prolonged default. Trade credit insurance lessens the financial blow by covering a pre-determined percentage of the outstanding invoices. This way, even if the customer goes bankrupt, you will still get some of the money you are owed.
  • Protracted Default: Coverage for situations where a customer is unable or unwilling to pay with the agreed terms, even if they are not officially insolvent. You can set a time limit for when accounts receivable insurance will start to pay out. This way, you can be sure to get the money you are owed within a reasonable period and avoid cash flow problems.
  • Political Risks: This includes coverage for losses due to political events that prevent payment such as government intervention, political instability, currency transfer restrictions, and war. 

Who Needs Accounts Receivable Insurance? 

While accounts receivable insurance offers valuable protection for any Ontario business, it’s particularly advantageous for several specific industries:

Construction Companies 

The construction industry is highly susceptible to payment delays and defaults due to the complex nature of its projects and the involvement of multiple parties. Trade credit insurance provides construction companies and contractors with the financial security they need to manage cash flow effectively. 

By protecting against non-payment from clients and contractors, businesses can confidently take on larger projects, invest in equipment, and hire skilled labour without the fear of financial setbacks. This insurance also allows construction firms to extend favourable credit terms, making them more competitive in the bidding process.

Manufacturing Companies 

Manufacturing companies often have small profit margins and depend on distributors or retailers paying them on time. Accounts receivable insurance ensures that manufacturers receive payment for their products, even if a buyer defaults.

This protection allows manufacturers to offer credit to a broader range of customers, including international clients, without increasing financial risk. It also enables them to maintain steady production schedules, invest in new technologies, and expand their market reach, ultimately driving growth and profitability.

Professional Services Firms 

Professional services firms, such as legal, accounting businesses, engineers, and consultants, often work with clients on a credit basis, invoicing for services rendered over extended periods. Trade credit insurance works to safeguard these firms against the risk of non-payment, ensuring they can maintain cash flow and meet their own financial commitments. This security is particularly valuable in industries where client payment timelines can be unpredictable.

Why Choose KASE Insurance 

Trade credit insurance policies are an effective financial risk management solution for Ontario businesses building their safety net.

Invest in the future of your business; partner with KASE Insurance. Our team of expert insurance brokers will walk you through the complicated coverage options, give you honest answers to your questions, and negotiate good terms for you. We’re committed to providing you with the most comprehensive and competitive trade credit insurance policy available. 

Contact our team today and let’s discuss how trade credit insurance can safeguard your Ontario business. Propel your business towards a secure financial future today!

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By far the most professional and trustworthy insurance brokerage I have known. We have been working with this firm for number of years now and I have nothing but good to say about their team and services. Stan and his team won't stop until we are fully satisfied. They are always on top of things, super fast in their assistance and very professional. I highly recommend this firm to anyone seeking for great insurance brokerage to work with. Big Thank You to Stan and Kase Insurance for many many years of great service!

Reviewer: Alex K

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5 out of 5 stars

Stan and is team at KASE Insurance have been fantastic in explaining what insurance we needed for our business. Very hands on approach and detailed. I work highly recommend KASE Insurance for any business owner looking for great service.

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5 out of 5 stars

The KASE team is very easy to work with. They answer your questions quickly, walk you through the process patiently, and find you great rates. We've been working with them for a few years and we haven't felt the need to shop elsewhere because of their customer service.

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5 out of 5 stars

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