Credit insurance provides cover for businesses against non-payment of short term finance, such as invoices, from your customers. Businesses frequently come across issues related to unpaid and overdue invoices, but credit insurance helps to safeguard your company against unpaid debt. It gives you the confidence to extend credit to new customers and improves access to funding, often at more competitive rates.
What is credit insurance?
Trade credit insurance provides cover for businesses against non-payment of short-term finance, such as invoices, from your customers. Businesses frequently come across issues related to unpaid and overdue invoices, but credit insurance helps to safeguard your company against unpaid debt. It gives you the confidence to extend credit to new customers and improves access to funding, often at more competitive rates.
Put simply, should the worst happen, such as a customer’s insolvency or protracted default, credit insurance can protect your bottom line and maintain your cash flow.
What is commercial credit insurance?
Commercial credit insurance is another term used for credit insurance. There are many different terms used to describe credit insurance including: trade credit insurance, export credit insurance, invoice insurance, and bad debt protection.
How does credit insurance work?
When you set up a credit insurance policy, you provide information on your business and your customers, including a list of top buyers and a recent loss history. We review the financial health of your buyers to establish credit limits and trade credit terms, such as the maximum invoicing period, and your premium.
If a customer does not pay you when they should have done, usually within 30 days or more, or within any extended time, you can notify us and we will collect the debt on your behalf. If the company becomes insolvent or is unable to pay the balance they owe, you can file a claim to recover the debt. The follow diagram explains how it works:
During the course of the policy, we continually monitor your customers and adjust our credit limits, helping you to expand your business safely and avoid potential losses. Similarly, as your company expands its sales, new customers can be added to the policy. If you do not agree with our credit decisions, you can apply for them to be increased, reduced, or removed. In some cases, automatic coverage up to a certain amount or percentage of sales is granted to give greater trading flexibility.
What does trade credit insurance cover?
Trade credit insurance covers you against unpaid commercial credit caused by late payments, customer bankruptcy, political risks such as sanctions introduced because of war, natural disasters, pre-shipment risks and other reasons agreed with your insurer. Credit insurance policies will vary depending on the business and the insurer.
What are the benefits of credit insurance?
Credit insurance provides businesses with greater financial security by protecting cashflow, reducing exposure to customer non‑payment, and helping companies trade with confidence, even when market conditions are uncertain.
Avoid risk and make sure your business recovers payments
- According to data published by the UK Insolvency Service,
UK insolvencies have remained close to 30‑year highs, with around 2,000 companies entering insolvency each month in 2025, reflecting sustained financial pressure across key sectors - Late payments continue to be a major challenge. The Coface 2025 UK Payment Survey found that 90% of UK companies experienced late payments, with the average delay stretching to 32 days, putting strain on cashflow - especially for SMEs
- Research from the Small Business Commissioner shows late payments cost the UK economy £11 billion annually, causing 14,000 business closures each year and taking up significant internal resources chasing overdue debts
- Credit insurance helps businesses avoid these risks, recover payments efficiently, and maintain stable cashflow even when customers fail to pay.
Why use Coface Credit Insurance?
- Coface is considered one of the top credit insurance companies and has been a global leader in credit insurance for 80 years. With Coface, you can:
- Safeguard your business against bad debt and establish realistic credit limits for customers
- Run credit risk checks to monitor the financial health of your customers and assess risk before you trade
- Access our debt collection service to rapidly collect late payments
- Unlock better financing options, including more favourable borrowing terms
- Identify opportunities for growth both domestically and in new markets
As Jonathan Berry, CFO, DCS Group explains, Coface makes growth easy. Their credit insurance gives us the confidence to expand without worrying about bad debt — and the real‑time credit risk monitoring is invaluable.”
Is a credit insurance policy different from other types of insurance?
Yes. With most types of business insurance, such as employers’ liability or buildings insurance policies, you have little contact with the insurer between renewals, unless you make a claim.
By contrast, the best credit insurers actively support your trading throughout the year and provide an early warning system should changes in the risk status of customers occur. This help you avoid foreseeable losses.
To be effective, credit insurance should be a partnership between both parties. You tell the insurer about customers’ payment behaviour and notify the insurer of overdue payments, and the insurer feeds this customer information into its database, alongside data from other sources, such as financial statements and public records.
At Coface, we give you access to a wealth of business information and by working with you, we can determine the level of credit risk, adjust the level of cover and agree on credit limits. The diagram below shows how this works:
How much does trade credit insurance cost?
There are credit insurance policies to suit all budgets. Trade credit insurance cost is referred to as premium and is generally set according to your turnover and business profile, including industry sector, number of customers and previous loss history.
After an assessment, we will provide a quote that sets out price and policy terms, including amount of cover, level of self-retention (typically 10%), and whether there’s a deductible or minimum threshold for claims. Contact us to get a quote today.
Is credit insurance right for your company?
Whatever sector you work in, Coface credit insurance policies are taken out specifically for your situation. Coface not only offers credit insurance for the United Kingdom and Ireland, but also companies that operate internationally, this also allows your company to grow safely into new foreign markets.
Even if you conduct thorough checks on your customers, today’s economic climate presents new challenges for UK businesses. High interest rates, rising operating costs, and increased insolvency rates across sectors such as construction, retail, and manufacturing continue to put pressure on cashflow and credit risk.
With Coface trade credit insurance you will receive extensive information about your customers, andwe will carry out the collection for you and pay claims when your customers can’t. This is why many of our customers choose Coface, including DCS Group, the UK’s leading distributor of household and personal care brands. They rely on Coface to support rapid expansion, monitor customer risk in real time, and protect the business from bad debt while continuing to grow confidently.
How else can credit insurance benefit businesses?
Better banking terms
Banks are more likely to lend to businesses that have credit insurance, and some banks make it a requirement, with businesses like Abbey Pipework experiencing it first-hand. Operating in a high‑risk sector, they rely on Coface’s credit insurance to give both their business, and their finance partners greater confidence in customer payment behaviour. Coface’s real‑time risk monitoring and hands‑on support help Abbey maintain strong cashflow, strengthen their financial position, and operate securely even when market conditions are volatile.
However, the benefits are that borrowing costs are also often lower, and the opportunities and cost savings provided by trade credit insurance can offset the cost of the policy.
Improved cash flow
Your cashflow is a powerful yet vulnerable resource, and you know the importance of protecting yourself against unpaid invoices and insolvencies. Credit insurance helps companies avoid risks and replaces cashflow should the worst happen, and a customer insolvency or non-payment occur.
Mitigate against loss
For example, a manufacturer with a margin of 4% that experiences a non-payment of £50,000 would need 25 equivalent sales to make up for a single instance of non-payment. Credit insurance mitigates this loss.
Save money on expenses
You can cut spending on credit information as that’s covered, and you won’t need to waste resources on chasing collections. Your company can also deduct the cost of the policy as a business expense.
Free up bad debt reserves
Capital set aside as reserves can be freed and converted to earnings.
Increase sales
Credit insurance lets you offer more competitive credit lines to existing customers as well as identify new market opportunities. Making it easier to grow your business. Multiplying this increase by several customers could easily offset the cost of a policy.
Business development
By entrusting the protection of your debtor book to credit insurance, you can focus your time on business development. Additionally, Coface offers a global analysis of country, sectors and company credit risk in real time, giving you the freedom to pursue your growth strategies with confidence.
Supplier relationships
You may be able to negotiate favourable terms with your suppliers as a credit insurance policy reduces the impact of a bad debt on them and potentially the whole supply chain.
Peace of mind
Credit insurance is there to help you prevent and mitigate your trading risks, so you can develop your business with the knowledge that your accounts are protected.
Real-life example of how using credit insurance can increase business stability and protect cashflow
Abbey Pipework operates in the high‑risk UK construction sector, where delayed payments and contractor insolvencies are common. The business works primarily with second- and third‑tier contractors and invoices only on completion of works, leaving it exposed to payment delays across the supply chain. Abbey Pipework had experienced the impact of major industry failures and needed stronger financial protection to support ongoing growth.
To safeguard its cashflow and reduce exposure to customer non‑payment, Abbey Pipework partnered with Coface and implemented a TradeLiner credit insurance policy. The policy provides real‑time risk assessments, payment default protection, and support in collecting overdue invoices. This strengthened Abbey’s confidence when trading with contractors and helped them maintain their commitment to paying suppliers within 30 days, even during periods of sector instability.
How DCS Group also use Coface credit insurance to improve credit management and support growth?
As part of sustaining long‑term growth, DCS Group uses Coface trade credit insurance as a core element of its credit management strategy. As the UK’s leading distributor of household and personal care brands, DCS operates at scale across a large and diverse customer base and requires clear visibility over customer risk to support confident trading decisions. Coface provides real‑time monitoring of customer creditworthiness, flexible credit limits, and ongoing support to help DCS manage exposure while continuing to expand.
This partnership allows DCS Group to focus on growth without the distraction of bad debt. Credit insurance helps the business avoid losses, maintain strong cash flow, and make informed decisions when trading with existing and new customers. According to the DCS senior management team, Coface’s insights and proactive risk management support play a vital role in enabling the company to grow safely and sustainably in a challenging economic environment.
What makes Coface one of the best credit insurance companies?
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