The Hidden Risk of Selling on Credit (And How to Protect Your Business)
Running a business in New Zealand often means selling on credit. 30, 60, sometimes 90 days. It’s normal but it also exposes your business to one of the biggest risks: not getting paid.
In this episode, I played golf with Nick Chan from Coface to break down trade credit insurance what it is, who it’s for, and why it’s becoming more relevant as insolvencies rise.
What Is Trade Credit Insurance?
Trade credit insurance protects your business if a customer can’t pay.
If you’re selling on credit terms and a client goes under or fails to pay, the policy helps cover that loss and protect your cashflow.
The Real Risk With Selling on Credit
The risk isn’t always obvious. A customer might have always paid on time, but you don’t see what’s happening behind the scenes in their business.
Trade credit insurance helps by:
Assessing customer risk
Setting credit limits
Covering you if things go wrong
It supports how you already trade it doesn’t change it.
What Does Trade Credit Insurance Cover?
Policies can cover:
Insolvency or liquidation
Late or missed payments
Extended payment terms (often up to 120 days)
Most policies cover up to 90% of the unpaid invoice.
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?
It’s more affordable than most expect.
Roughly:
Around $300 per $100,000 of turnover
Many businesses simply factor this into their pricing.
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 is worth considering if:
You sell on credit terms
You’re growing or taking on larger clients
A bad debt would impact your cashflow
Key Takeaways From the Round
If you sell on credit, there’s always risk.
Trade credit insurance isn’t about fear it’s about control, protecting cashflow, and growing with confidence.