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Trade credit insurance protects a business against the risk that a client will not pay for goods or services supplied on credit terms, whether through insolvency or protracted default. It is also called debtor insurance or accounts receivable insurance. National Credit Insurance (NCI) has arranged it for Australian businesses since 1985.
Most businesses sell on credit. You deliver the goods or complete the work, issue an invoice and wait 30, 60, or 90 days to be paid. For that period your client holds your money and your debtors ledger is often the largest asset on your balance sheet that is not insured.
Trade credit insurance closes that gap. If an insured client becomes insolvent or simply fails to pay within the agreed period, the insurer pays you an agreed percentage of the debt, typically 90%. You keep your cash flow, your profit on the sale, and the confidence to keep trading.
NCI is a specialist trade credit insurance broker, not an insurer. We arrange cover with insurers including Swiss Re, Allianz Trade, Coface, Atradius, The Bond and Credit Company and Unity Trade Credit. We manage the policy, credit limits, and claims on your behalf.
A policy responds to three kinds of non payment. Most Australian policies include the first two as standard, and export clients add the third.
Insolvency. Your client enters liquidation, voluntary administration, receivership, or bankruptcy and cannot pay what it owes you.
Protracted default. Your client is still trading but has not paid within an agreed period after the due date, generally up to 180 days. There are conditions that need to be met to claim under protracted default.
Political and export risk. An overseas buyer cannot pay because of events outside its control, such as currency transfer restrictions, import bans, war, or government action in the buyer’s country.
Cover applies to your credit sales. The policy does not cover sales above your approved credit limit, or debts that were already overdue when the policy started. See the section on what is not covered below.
A policy generally runs for 12 or 24 months and follows five steps. NCI manages each one with you.
Nothing changes in how you trade. You continue to quote, deliver and invoice as you do today. The policy sits behind your existing credit management procedures.
For each insured client above your Discretionary Limit, the insurer reviews financial information, payment history and industry conditions, then approves a credit limit. Smaller exposures are usually covered under a discretionary limit based on your own credit checks or checks that can be done via NCI.
Sales up to each approved limit are insured. NCI monitors the limits through NCILink, our online client portal and alerts you if there are any changes to your clients ability to pay.
You report the overdue account within the period set by the policy, this can vary. Early notification also lets NCI’s commercial collections team start recovery action, as directed by you, which often resolves the debt before a claim is needed.
If the debt is not recovered, you lodge a claim. Once it is approved the insurer pays the insured percentage of the debt, less any excess. NCI prepares and follows the claim with the insurer on your behalf.
Premiums are calculated as a percentage of your insured turnover, not of the debt covered. For most Australian businesses the rate is a fraction of a percent of insured sales, and the premium rate is agreed for the policy year at the start.
The rate depends on the industry you trade in, who your top clients are and how concentrated your ledger is, the payment terms you offer, your bad debt history, the indemnity level you choose and the excess you are prepared to carry. A whole of turnover policy across a broad ledger costs less per dollar of sales than cover on a small number of large clients.
Policies typically indemnify 90% of the insured debt, with options from 80% to 95%. A policy excess, either per claim or for the year, may also apply depending on the structure that best suits your business.
Insolvency claims are paid once the insolvency is confirmed and the claim is agreed, usually within 30 days of the insurer receiving the documents. Protracted default claims are paid after the waiting period set in the policy, commonly 90 to 180 days from the due date.
Cover is matched to the exposure, not sold as a one size product. These are the structures NCI arranges most often.
Whole turnover. Insures your entire debtors ledger, domestic and export. The most common and most cost effective structure for businesses with many clients.
Key account or named buyer. Insures a selected group of your largest clients, where a single failure would hurt most.
Single buyer. Insures one client only, often for a large contract or a large single buyer.
Export. Cover for overseas buyers, including political risk, arranged as a standalone policy or added to a whole turnover policy.
Top up. Additional cover above an insurer’s approved limit, or a policy that responds only once your own losses pass an agreed threshold, for larger businesses with strong credit management.
Knowing the limits of a policy matters as much as knowing what it pays. The usual exclusions are:
Disputed debts. If your client disputes the goods, the service, or the invoice, the claim waits until the dispute is resolved in your favour.
Sales above the approved credit limit. The portion of a debt above the limit approved for that client is not insured.
Debts already overdue when cover starts. A policy insures future sales, not existing bad debts.
Sales to related companies and government bodies. These are excluded from the policy.
Late reporting. Overdue accounts must be reported within the time the policy sets. NCILink reminders and NCI’s account managers help you meet these deadlines.
Any business that supplies goods or services on credit carries this risk. It matters most when a single unpaid invoice would do real damage.
Your five largest clients make up a large share of your sales.
You offer 30 day terms or longer, or your clients regularly pay late.
Your margins are thin, so one bad debt wipes out the profit on many good sales.
You sell into building and construction, transport, manufacturing, wholesale, food and agriculture, labour hire, or steel and industrial supply, where insolvencies are most frequent.
You export, or plan to, and cannot assess overseas buyers yourself.
You are growing quickly and taking on new clients faster than you can check them.
Your bank or financier would lend more against an insured ledger.
If two or more of these describe your business, cover is worth a conversation. NCI will give you an honest read of where the risk sits, even when the answer is that you do not need a policy yet.
Businesses usually manage non payment risk in one of three ways. They are not the same thing.
Money set aside from profit to absorb losses. It is cheap to set up but caps your protection at the amount you have saved, ties up capital and does nothing to recover the debt or warn you of rising risk. It does not put cash back in your hands when a large client fails.
A lender advances cash against your invoices. It improves cash flow but you remain liable if the client does not pay, unless the facility is insured. Debtor finance is a funding tool, not protection.
The insurer carries the loss if a client fails to pay and NCI’s credit information and collections services reduce the chance of it happening. Insured ledgers also support better finance terms, so the two often work together.
Company failures in Australia have stayed above 14,000 a year for two years running. These are the businesses that owe money to their suppliers when they close.
Source: ASIC insolvency statistics, financial year 2025 to 2026, published July 2026.
A Victorian steel fabricator turns over AUD $12 million a year and carries a debtors ledger of around AUD $2.5 million at any time. It takes out a whole turnover policy with 90% indemnity. Its largest client, a builder, is approved for a credit limit of AUD $250,000.
The builder enters voluntary administration owing the fabricator AUD $180,000. The fabricator lodges the claim via NCI once the administrator confirms the insolvency.
The insurer pays 90% of the insured debt typically within 30 days of the claim being agreed. Without cover, the business would have needed AUD $180,000 of new sales at a 10% margin, AUD $1.8 million in total, to replace the lost profit.
Trade credit insurance protects a business against losses when a client fails to pay for goods or services supplied on credit, because of insolvency or protracted default. The insurer pays an agreed percentage of the unpaid debt, typically 90%, so the loss does not fall on your cash flow.
You insure your receivables under an annual policy. The insurer approves a credit limit for each insured client, you trade within those limits, and if a client cannot pay you report the debt and claim. NCI arranges the policy, manages the limits and reports through NCILink, and handles the claim with the insurer.
It covers non payment through client insolvency and protracted default. Export policies also cover political risks such as currency restrictions and government action in the buyer’s country. It does not cover disputed invoices or sales above the approved credit limit.
Any business that sells on credit terms, and especially those with a concentrated client base, long payment terms, thin margins, or exposure to high risk sectors such as construction. Exporters and fast growing businesses also rely on it to take on new clients safely.
Premiums are a percentage of insured turnover, usually a fraction of 1%, agreed for the policy year. The rate reflects your industry, the spread of your ledger, your payment terms, your bad debt history, and the indemnity and excess you choose. NCI compares quotes from several insurers for you.
For a business trading on credit, one large bad debt can erase the profit from years of good sales. Cover replaces that cash, adds insurer credit intelligence on your clients and often supports better finance terms. Most clients find the premium is less than the cost of a single significant loss.
Typically 90% of the insured debt. Indemnity levels from 80% to 95% are available, and the choice affects the premium. A policy excess may also apply.
Yes. With cover in place you can offer credit terms to new clients, increase limits for existing clients and enter new markets knowing that non payment is insured. Banks and financiers may also lend more readily against an insured ledger.
Yes. Export cover protects against overseas buyer default and political risk, and can be arranged on its own or as part of a whole turnover policy. NCI has offices in Australia, New Zealand, Singapore, and Malaysia and arranges cover for exporters worldwide.
We lodge the claim with the insurer and once the insolvency is confirmed and the claim agreed the insurer pays the insured percentage, usually within 30 days. Any later dividend from the administrator is shared between you and the insurer.
Debtor finance advances cash against your invoices but leaves you liable if the client does not pay. Trade credit insurance transfers that risk to the insurer. The two are often used together, because an insured ledger usually attracts better finance terms.
Insurers review financial statements, payment history, trade references, industry conditions and their own experience with the client to set a credit limit. NCI’s credit services team can supplement this with credit reports and monitoring through NCI.
Yes. Policies can cover your whole ledger, a group of key clients, or a single buyer. NCI will recommend the structure that matches your exposure and budget.
No. The policy operates between you, NCI, and the insurer. Your clients are not contacted unless a debt is overdue and you ask NCI’s collections team to act, and even then the approach is professional and designed to preserve the relationship.
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