Ryan Hurtado
Trade Credit Advisor, Business Insurance
In an increasingly uncertain economic environment, businesses of all sizes can benefit from trade credit insurance (TCI). Whether you manage thousands of clients or have a concentrated risk with just a few customers, TCI allows organizations to insure their accounts receivable. This protection safeguards against bankruptcy and slow payments, enabling companies to infuse more active capital into their operations. As our nation navigates rising economic uncertainties, including supply chain disruptions, inflation, interest rate fluctuations, and geopolitical instability, understanding the role of TCI becomes increasingly crucial for maintaining cash flow and ensuring business growth.
Understanding trade credit insurance in an uncertain economy
TCI serves as a vital tool for financial risk management. It helps companies identify growth opportunities, assess risk within their portfolios, and make informed credit decisions regarding their buyers. In today's climate of elevated costs, providing secure lines of credit is imperative.
There is no secret that inflation is still an issue in the United States. The recent tariffs imposed on March 12, 2025, on steel and aluminum will likely raise prices on many products. The weighted average of tariffs is the highest it has been since the Great Depression. The cost of borrowing is higher for businesses, with the prime rate being 7.5%. This means cash flow management is more crucial than ever for companies. For a business to succeed, its sales and financing strategies must become more competitive than ever before.
The key benefits of TCI include protection against catastrophic risks, safeguarding against slow payments and bad debt. It enhances credit decisions, facilitates stronger and quicker credit assessments, and enables ongoing customer monitoring to identify signs of financial distress. Additionally, TCI reduces the need for insufficient debt reserves, freeing up cash for other uses, and improves supplier terms and limits, thereby enhancing relationships with suppliers. It also enables safe sales expansion and strengthens banking relationships through secured accounts receivable.
The connection to economic uncertainty is evident, as political risks, such as transfer risk and government moratoriums, can hinder payment processes. An increase in late payments and insolvencies is being observed, and tighter lending conditions are becoming the norm. Consequently, there is a growing demand for credit protection.
Breakdown of industry impact
In the construction industry, businesses face challenges such as payment delays resulting from project overruns or bankrupt contractors, supply chain disruptions, and increasing project financing costs. TCI can help protect subcontractors and suppliers from bad debt, facilitate secure B2B relationships, and improve project forecasting.
Manufacturers are facing longer payment terms and supply chain issues from critical vendors, along with rising material costs. TCI helps verify customer strength before sourcing materials, secures credit from vendors, and enables larger credit lines with protection against bad debt.
Wholesalers and distributors manage large and diverse customer segments across various industries, increasing the potential for customer defaults. TCI analyzes total portfolio risk and opportunity, provides unique terms for different customer bases, and enables instant credit extension to new customers.
Service-based businesses often face the challenge of needing to pay staff and vendors before receiving payments, which can strain cash flow. TCI can provide peace of mind, strengthen lending relationships, and enable businesses to lend against accounts receivable.
The strategic advantages of TCI for businesses include enhanced credit decision-making with access to extensive data sets and underwriting support. It boosts confidence in expanding into new markets and helps maintain healthy balance sheets during economic downturns.
Navigating risk with confidence
As business bankruptcies in the United States continue to rise—up 23.5% in 2025 compared to 2024—payment delays are expected to extend throughout the economy for those without insurance. The TCI market is projected to grow amid ongoing economic uncertainty, creating a sense of urgency for companies to secure credit through these carriers. Recent statements from the Federal Reserve Chairman highlight the potential for tariffs to stifle growth and exacerbate inflation, further limiting carriers' willingness to write new credit. This creates more urgency for companies of all sizes to adopt TCI policies in the next 60 days.
To learn more about how TCI can help protect your business, we encourage you to visit MMA Trade Credit Insurance.
