Sell on credit without the risk.

Your Receivables Are Probably Your Largest Uninsured Asset

Most businesses insure their premises, their vehicles, their stock, and their equipment as a matter of course. Yet for a great many Kenyan companies, the largest single item on the balance sheet is not any of those. It is the debtor book: money owed by customers for goods and services already delivered.

That asset is usually carried entirely uninsured. If a major customer collapses owing you three months of invoices, the loss falls straight to the bottom line, and it can take the profit from a year of trading with it. Trade credit insurance treats receivables as what they are, an asset worth protecting.

What the Policy Covers

Trade credit insurance responds where a customer fails to pay a valid, undisputed debt. The two principal triggers are:

• Insolvency: The customer enters liquidation, administration, receivership, or an equivalent formal insolvency process.
• Protracted default: The customer remains solvent but has failed to pay for an agreed period beyond the due date, commonly between ninety and one hundred and eighty days. This is the more frequent claim in practice.

Policies indemnify an agreed percentage of the insured debt, typically eighty to ninety per cent, with the balance retained by you so that both parties share an interest in careful credit management. Cover can extend to political risk on export sales, where payment is prevented by currency inconvertibility, import or export licence cancellation, or government action in the buyer's country.

Where Credit Insurance Delivers Most Value

The businesses that gain most from credit insurance share certain characteristics. If several of the following describe your business, the case for cover is usually strong:

• Customer concentration: A handful of customers account for a large proportion of turnover, so a single failure is material.
• Thin margins: Where net margins are in single digits, one unpaid invoice cancels the profit on a great many others.
• Growth into unfamiliar customers: Expansion into new sectors, counties, or export markets where you have no payment history to rely on.
• Long payment terms: Sixty, ninety, or one hundred and twenty day terms leave large sums outstanding at any moment.
• Receivables-based funding: Lenders advance more, and often more cheaply, against an insured debtor book.
• Competitive pressure on terms: Where winning business increasingly depends on offering open credit rather than demanding payment up front.

More Than a Claims Payment

The indemnity is only part of what a credit insurance programme provides, and often not the most useful part. Underwriters maintain extensive credit intelligence on companies across Kenya and the region, and as a policyholder you gain access to that assessment.

When you request a credit limit on a prospective customer, the underwriter's response is a considered view on that company's financial condition. An approved limit is a signal that you can extend terms with reasonable confidence. A refusal or a reduced limit is an early warning that is frequently more current than anything available from public sources, and it lets you adjust terms before an exposure becomes a loss.

Many policyholders find that this monitoring function changes how they trade. It supports faster decisions on new accounts, gives the sales team a defensible basis for terms, and provides the credit control function with an independent view rather than relying on internal judgement alone.

How Cover Is Structured

Credit insurance is not one product. Structures vary considerably, and choosing the right one determines both cost and usefulness:

Whole turnover policies cover your entire credit sales ledger, with credit limits set for each customer. This is the most common structure and generally the most cost-effective, because the underwriter is spreading risk across your whole book rather than concentrating on your weakest accounts.

Key account policies cover only your largest or most concentrated exposures. Useful where the bulk of the risk sits with a few named customers and the remaining ledger is fragmented and low-value.

Excess of loss policies leave normal, budgeted bad debt with you and respond only once aggregate losses exceed an agreed threshold in a policy year. Suited to larger businesses with mature credit management functions that want protection against catastrophic rather than routine default.

Single buyer policies cover one specific customer or contract, typically where a single order is large enough to be transformative or ruinous.

Your Obligations Under the Policy

Credit insurance is a partnership, and policyholders carry real duties. You will normally be required to trade within the credit limits the underwriter approves, to report overdue accounts within a stated period, to stop further supply to a customer once they are seriously overdue, and to pursue collection with reasonable diligence. Continuing to ship to a customer who is already well past terms is the most common reason a claim is reduced or declined.

These conditions are not obstacles so much as disciplines, and businesses often find their credit control improves simply through having them formalised. Minova makes sure you understand the obligations before inception, and we help embed the reporting requirements into your existing processes rather than bolting on a parallel administrative burden.

Working With Minova

Credit insurance rewards careful placement. The value of a policy depends heavily on the credit limits the underwriter is willing to approve on your actual customers, and different underwriters take materially different views of the same buyer. Presenting your ledger well, with clear trading history and payment performance data, has a direct effect on the limits you are granted.

We prepare that submission, approach underwriters whose appetite matches your sector and customer profile, negotiate limits and terms, and support you through limit applications and claims for as long as the policy runs. If you would like an assessment of where your debtor book is most exposed, we are glad to review it with you.