Credit Risk in a connected world

Trade credit risk in a delicate globalised world has become an increasing concern for the business community. Fresh from the memory of the massive credit fallout beginning in 2007, the global economy has now once again plunged into fears from the problems besetting Europe and USA.

History has been made with the downgrading of USA sovereign credit rating. Sovereign debts holders (mostly financial institutions), concerned with their balance sheet over the possible defaults, are restricting their lending further. This may well lead to another credit crunch spreading across the globe, resulting in a chain reaction of corporate default and insolvency.

 

What is Credit Risk Insurance

Trade Credit Insurance, in a nutshell, is a credit risk management instrument in the form of insurance which provides coverage against non-payment from your buyers.

 

How can Credit Risk Insurance support your business

Risk Management

  • Protects your company against unforeseen bad debts
  • Cash flow and profit protection i.e. A sale is not a sale until full payment is received
  • Reinforcement of your credit control management
  • Alleviates concern about very high buyer exposures
  • Continuous monitoring and assessment of your buyers' risks by insurers, thereby providing an early warning system

Balance Sheet Financing

  • Improve the balance sheet by reducing provision on doubtful debts and bad debts write off
  • Helps your company to obtain more attractive bank financing and credits from suppliers
  • Assign the insurance policy as security for banks to provide trade finance

Sales Booster

  • Helps your company in developing sales potential
  • Offer more competitive payment terms, e.g. convert letters of credit to open account
  • Gives your company the ability to effectively deal with changing industry or foreign country conditions
  • Increase credit limits and sell more to existing buyers
  • Unlock new markets and sell confidently to new buyers

Cost Competitive

  • Cost of insurance is a small fraction of sales value
  • More economical than letters of credit
  • Insurance premium is tax-deductible

At Lockton, we are committed to helping our clients in riding through the uncertain times, turning crisis into opportunity and emerge a stronger corporation.

Whether you are a new or existing user of trade credit insurance, we are here to provide our specialist’s consultation, in reviewing your needs and demonstrating our commitment and strong capabilities to address your concerns.

 

Trade Credit Insurance Scheme (TCIS) – ACCESS TO 50% PREMIUM SUPPORT

With effect from 1 March 2011, eligible companies will be able to benefit from the premium support on trade credit insurance program under the Trade Credit Insurance Scheme (TCIS) sponsored by IE Singapore.

Key Contact - Singapore

Clarence Goh
Regional Director
+65 6326 9235
clarence.goh@asia.lockton.com

Key Contact - Hong Kong

Sandy Au
Senior Vice President, Hong Kong
+852 2250 2875
sandy.au@asia.lockton.com

Key Contact - China

Jenny Cui
Senior Vice President, Shanghai
+86 21 5820 2376
jenny.cui@asia.lockton.com

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Read more in the Lockton Newsroom