Trade Credit Insurance: How NZ Businesses Protect Cashflow When Customers Don’t Pay
Running a business in New Zealand often means selling on credit. Thirty days. Sixty days. Sometimes longer. It’s normal but it also quietly exposes your business to one of the biggest risks out there: not getting paid.
On this episode of About the Green, I teed it up with Nick Chan from Coface to talk about trade credit insurance a solution many business owners haven’t heard of, but one that can make a massive difference to cashflow, confidence, and sleep at night.
Nick breaks down what trade credit insurance actually is, who it’s for, how much it costs, and why it’s becoming more relevant as insolvencies rise across New Zealand.
What Is Trade Credit Insurance?
Trade credit insurance protects your business if a customer fails to pay you.
Simple as that.
If you sell goods or services on credit terms and your customer goes into liquidation, shuts up shop, or simply can’t pay, trade credit insurance helps cover that loss.
Nick put it bluntly: if you sell on credit terms, this applies to you. Industry doesn’t matter. Size doesn’t matter. If invoices go unpaid, your cashflow takes the hit and that’s what this product is designed to protect.
The Real Risk With Selling on Credit
A lot of business owners assume that because a customer has always paid in the past, they’ll always pay in the future.
That’s where the danger sits.
You don’t always know what’s happening behind the scenes in your customer’s business — their cashflow, debt levels, or whether they’re quietly struggling. Yet you’re still delivering product or services and waiting 30, 60, or even 90 days to be paid.
Trade credit insurance steps in by:
Assessing the credit risk of your customers
Setting approved credit limits
Protecting you if something goes wrong
It’s not about changing how you trade — it’s about supporting the way you already trade.
What Does Trade Credit Insurance Cover?
One of the big takeaways from this episode was how flexible the cover actually is.
Trade credit insurance can cover:
Insolvency or liquidation of a customer
Extended payment delays
Customers who simply can’t pay
Coface policies typically allow credit periods of up to 120 days, meaning if you extend terms commercially to help a customer and they later fall over, your invoices can still be covered.
Most modern policies cover up to 90% of the unpaid invoice, keeping a small amount of risk with the business owner so everyone stays commercially sensible.
Do You Cover Just Risky Customers — or Everyone?
This surprised a lot of people.
While you can insure individual customers, it’s often better (and cheaper) to insure your whole debtor book. Why?
Because the biggest shocks usually come from customers you thought were “safe”.
Covering the full ledger spreads the risk and protects you from the unexpected even from long-term customers you’ve traded with for years.
How Much Does Trade Credit Insurance Cost?
Another myth Nick cleared up quickly: it’s not expensive.
As a rough guide, pricing can be around:
$300 per $100,000 of turnover
That’s a tiny percentage when you consider what one bad debt can do to your business. Many businesses also choose to build the cost into pricing, effectively passing it on across their customer base.
When you stack it up against the risk of a major unpaid invoice, the cost is often a no-brainer.
The Biggest Objection Nick Hears
The most common pushback?
“We’ve never had a bad debt before.”
And that’s fair until it isn’t.
Insurance isn’t about what happened yesterday. It’s about protecting what you’ve built for tomorrow. With insolvencies in New Zealand climbing month-on-month, the risk profile has changed.
You don’t know which customer might fall over next and when your business relies on cashflow to pay staff, suppliers, and the mortgage, that risk matters.
Who Should Seriously Look at Trade Credit Insurance?
This episode is especially relevant if:
You sell on credit terms
You’re growing and taking on larger customers
Your industry is under pressure (construction, hospitality, retail, manufacturing)
One bad debt would hurt or cripple your cashflow
It’s not about fear. It’s about control.
Key Takeaways From the Round
If you sell on credit, trade credit insurance is worth understanding.
The cheat sheet:
Selling on credit always carries risk
Even “safe” customers can fail
Trade credit insurance protects cashflow, not just profit
Modern policies are flexible and affordable
It’s about growth with confidence, not playing defence
As Nick put it you insure your car, your house, and your health. If your business pays the bills, it deserves protection too.