The Importance of Credit Insurance in 2025

Happy New Year!

Our first blog post of the year covers something you may not have considered for your business, but which could prove to be of utmost importance for its survival this year: Credit Insurance.

Credit Insurance has been in the news this week, with the rescue of Bristol firm, Huboo, in a buy-out. The eCommerce fulfilment company, bought by an ‘investor consortium’, had been in administration, and highlights the financial vulnerabilities businesses face when clients experience financial distress. Several companies who used Huboo for their distribution found their own operations at risk as they encountered parcels stuck in warehouses, undelivered orders and dissatisfied customers – all in the hugely busy run-up to Christmas.

In such scenarios, Credit Insurance would serve as a vital safeguard for affected businesses, offering protection against potential losses arising from their distributor’s difficulties and insolvency.

So, what IS Credit Insurance?

Credit insurance, also known as Trade Credit Insurance, shields businesses from the financial risks associated with customer non-payment or insolvency. This coverage ensures that if a client fails to settle their debts due to insolvency or prolonged default, the insured business can recover a significant portion of the outstanding amount and live to trade successfully another day.

Here are the many benefits of credit insurance:

1. Protection against insolvencies and bad debts

With rising company insolvencies in the UK, credit insurance provides critical protection, ensuring businesses remain financially stable even if key clients fail to pay.

2. Enhanced access to financing

Lenders view companies that have credit insurance more favourably, as it reduces the business's risk profile. This can lead to improved credit terms and easier access to loans, facilitating growth and operational stability throughout the year.

3. Support for business growth

Credit insurance allows businesses to confidently extend credit to new and existing clients, knowing they are protected against potential non-payment. This confidence can drive sales and support expansion into new markets.

4. Improved credit management

Insurers often provide valuable insights into customer creditworthiness, helping businesses make informed decisions and avoid high-risk clients. This support enhances overall credit management practices.

Finding the right Credit Insurance policy

For any business weighing up the importance of credit insurance, it's essential to assess your business’s specific needs and risks, and choose a policy that aligns with its exact risk exposure.

Options range from covering all accounts receivable, to insuring against risks associated with a single client or transaction. Consulting with a broker who has wide access to all reputable credit insurance providers means that coverage can be tailored to your business's unique requirements.

Credit Insurance offers a strategic safety net for businesses, protecting against the financial repercussions of customer non-payment. By mitigating these risks, companies can maintain healthy cash flow, secure financing more readily and pursue growth opportunities throughout the whole of 2025 with greater confidence.

Other blogs which may be of interest:

Insolvencies in the UK: Trends, impacts & trade credit insurance

The benefits of trade credit insurance

Protect your business with Ascend Broking Group

At Ascend Broking Group, we understand the challenges businesses face when clients encounter financial difficulties. Our expert team can guide you in implementing Credit Insurance to safeguard your cash flow and protect against non-payment risks.

Contact us today on 01245 449060 or email info@ascendbroking.co.uk for a free consultation and discover how we can help you secure your financial future. Let’s work together to build resilience and confidence in your business operations, and a brighter 2025!