The role of credit insurance in supporting UK trade

More than 4 out of 5 daily business-to-business transactions in the UK are based on credit terms. So, if a customer fails to pay, your financial assets will be under pressure and trade could be affected. Credit insurance therefore plays a substantial role in UK trade, as well as abroad. Here we explore the role of trade credit insurance in supporting UK trade.

The UK economy is currently in an expansion phase following a low at the end of 2023, but trade credit insurance can support growth whether the business cycle is repairing or recessing.

Trade credit insurance allows you to trade with your existing customers with the risk covered up to a limit and offer terms when competitors can’t. It’ll also provide receivable protection which improves banks’ lending confidence should you seek funding for business expansion.

While B2C buy-now-pay-later companies are commonly known, we also offer e-commerce credit insurance for B2B e-merchants.

We’re seeing a generational shift in B2B buying right now. According to a recent Forrester survey, globally, millennials and Gen Zers now represent 71% of B2B buyers. This means that younger people are now having their say and trade must adapt to suit the more modern and connected needs of these decision makers.

So, what does this new generation want? Self-serve transaction channels and a seamless, holistic buyer experience.

Our e-commerce product, Allianz TradePay, allows you to offer customers deferred payment conditions online using an API connector and developer portal. It brings convenience, increased basket spend, and boosts online conversion rates. Plus, it indemnifies payments amongst shrinking disposable incomes and a cost of living crisis for added protection.

Role: Insights

In May 2024, the Secretary of State for Business and Trade told the Commons Cabinet:

‘When I am overseas, as Secretary of State for Business and Trade, other countries speak with nothing but admiration and respect for what we are achieving in Britain.’

However, just two months later, the UK went through a change in power following the July 2024 government election and with it came a lot of uncertainty as the party promised to improve the UK’s trading arrangements.

The Labour manifesto read:

"We will seek to negotiate a veterinary agreement to prevent unnecessary border checks and help tackle the cost of food; help our touring artists; and secure a mutual recognition agreement for professional qualifications to help open up markets for UK service exporters. We will improve guidance and remove barriers to exporting for small businesses."

We await the latest figures on what difference has been made in the first few months in government, but initial research from YouGov reveals new economic optimism has increased from -16 before the election to -2.

While trade credit insurance and political risk cover address different aspects of business protection, they work together to safeguard companies during periods of economic and political uncertainty.

At Allianz Trade, we proactively adjust the coverage limits for our customers' trading partners as conditions evolve, providing clear insights into the level of protection we offer. This enables businesses to manage both commercial and political risks with confidence, helping to mitigate unforeseen payment issues in an unpredictable world.

Role: Growth

When the UK trades with the EU or further afield, protecting against late payments can become more complex. There’ll be different regulations, currencies, and more. Therefore, trade credit insurance can provide invaluable insights, giving companies visibility and control of trade agreements to protect the bottom line and grow.

New markets, new customers, and a new country, all come with great potential for growth - but a lot of risk. So, we would recommend identifying suitable partners and centralising global operations early in your journey.

We have more than 62,000 clients worldwide, monitoring 83 million businesses in 160 countries. So, whether UK trade or global, we work with our customers to help make fast and informed decisions that meet compliance standards, remove trade barriers, and minimise trade risk.

How do we do this? We track and analyse companies operating in markets representing 92% of global GDP to provide early and informed insights on economic uncertainty.

Many policies also come with international debt collection services. So, there’s no need for you to get on a plane or tackle time differences when chasing missed payments.

Export credit insurance will offer your business:

• A competitive edge over competitors, thanks to flexible open credit terms
• Confidence that it’s safe to increase your exposure to new customers
• A streamlined platform for managing global credit
• Local knowledge and expertise

David Edgell, Regional Commercial Manager here at Allianz Trade shares his story of working with a well-established firm operating in the chemical sector in the UK. The company had a new business opportunity to trade with a client in Chile and sought our help.

Whether you’re looking for protection, insights or growth, Allianz Trade can help. Visit our trade credit insurance page and  get in touch for a personalised online quote.