A large order improves a sales forecast immediately. The cash arrives later, if the buyer pays on the agreed date. Between those two events, the seller finances stock, freight and the receivable. The useful question for a credit insurance submission is therefore the largest amount that could be outstanding to one buyer at the same time, rather than the annual sales figure alone.
For businesses preparing for year-end deliveries, that amount needs to include invoices already issued, goods in transit and the new order. A buyer limit that was adequate for ordinary monthly trading can be inadequate for a concentrated shipping programme. The policy’s rules on when cover attaches, overdue reporting and discretionary limits need to be checked before the exposure is assumed.
Brokers can make the discussion more concrete by supplying an aged debtor ledger, agreed payment terms and a delivery schedule. An increase in sales does not automatically produce an increase in insured capacity. A written limit decision and the policy conditions determine what is covered.
The commercial choice may be to stage deliveries, ask for a deposit or keep part of the order within an agreed exposure cap. Credit insurance supports a trading decision; it does not remove the need to decide how much working capital one customer should use.
Where this goes next
