MARKETING MATERIAL
The Cost of Non-Payment: Protecting Cash Flow and Supporting Growth
Accounts receivable can be one of a company’s largest assets – and one of its most exposed. AIG Trade Credit expert Jack Woodruff explains how insurance and timely credit insight can help businesses manage customer risk with greater confidence.
For many businesses, accounts receivable is one of the largest assets on the balance sheet, yet it is often overlooked and exposed.
When pressures such as insolvencies, economic shocks or supply chain disruption arise, even a healthy receivable can quickly become bad debt. Strong customer relationships, long trading histories and reliable payment records do not protect an organisation if a customer suddenly cannot pay.
That is why Trade Credit insurance can play an important role, helping businesses protect cash flow while continuing to grow, offer credit terms and keep operations moving.
“Economic cycles are getting shorter, and it’s not just in one region. It’s across the globe,” said Corine Troncy, Global Head, Trade Credit, AIG.
The Cost of Bad Debt
When a customer fails to pay, the impact can extend beyond the unpaid invoice to lost profit and the additional sales needed to recover it. For example, a business with a 5% net margin may need £2 million in additional revenue to offset a single £100,000 bad debt. Trade Credit insurance can therefore help protect both cash flow and margins.
Certainty of Cover: Supporting Sales and Production Planning
One feature of AIG’s Trade Credit insurance is the use of non-cancellable credit limits. Once AIG approves a customer limit, the insured business can continue trading through changing economic conditions with greater certainty that the agreed cover will remain in place, subject to the terms and conditions of the policy.
This certainty is especially valuable when market conditions change quickly. Yet effective customer credit decisions also require clear, timely insight into where exposure is building and risk is increasing.
TradEnable Xtra: Technology-Enabled Credit Management
That is where technology-enabled credit management becomes important. As customer ledgers grow and economic cycles vary, clients need practical tools that help them monitor exposures, identify early warning signs and decide where to extend credit with greater confidence.
AIG’s award-winning credit management platform, TradEnable Xtra, helps reduce the administrative effort involved in managing a credit insurance programme. Instead of manually tracking exposure across an expanding customer ledger, clients can use TradEnable Xtra to compare their ledger with AIG’s decades of global claims, payment and macroeconomic data. This depth of insight can reveal patterns and emerging risks that may not be visible from an individual customer relationship alone, helping clients identify potential issues earlier and make more informed credit decisions.
The Opportunity for Brokers
Receivables exposure can quickly become a strategic concern, making trade credit an important topic for relevant client discussions. The conversation should centre on certainty rather than catastrophe: reliable cover, better-informed credit decisions and protection against a single customer failure eroding a year’s growth. By combining AIG’s stable capacity with the data-driven insights of TradEnable Xtra, brokers can move beyond standard indemnity and raise potential risks early, before bad debt becomes urgent.