Did you know? U.S. business bankruptcies have risen 23.5% in 2025, leaving manufacturers increasingly vulnerable to unpaid invoices. Without credit insurance, manufacturers face serious financial risks that can harm cash flow, limit growth, and disrupt operations.
Here’s what’s at stake:
- Customer Bankruptcy Risk: Losing revenue when a key customer becomes insolvent can devastate cash flow. Credit insurance typically covers up to 90% of unpaid receivables.
- Cash Flow Problems: Late payments are common, with 51% of suppliers frequently experiencing delays. Insurance ensures steady cash flow even when customers default.
- Reduced Access to Loans: Banks often view uninsured receivables as risky, limiting borrowing potential. Insured receivables improve financing terms and access to credit.
- International Trade Risks: Exporting introduces risks like political instability and currency fluctuations. Export credit insurance covers up to 95% of losses.
- Poor Customer Credit Information: Incomplete or outdated credit data can lead to bad decisions. Insurance providers offer advanced credit insights to reduce risks.
Credit insurance isn’t just protection – it’s a tool to secure receivables, maintain cash flow, and confidently grow your business. With premiums often costing less than 1% of insured sales, it’s a cost-effective way to safeguard your financial health.
Take the Hairy B2B Deal! Credit Risk Insurance is a Critical Competitive Sales Advantage
1. Customer Bankruptcy Risk
When a major customer files for bankruptcy, unpaid invoices quickly turn into bad debt. This can wreak havoc on a company’s cash flow and working capital, especially when accounts receivable make up as much as 40% of a company’s assets. For manufacturers, customer bankruptcy is one of the most severe challenges they can face.
How Customer Bankruptcy Impacts Manufacturers
Customer bankruptcy can throw a wrench into a manufacturer’s operations. When customers become insolvent and can’t pay, manufacturers lose not just the revenue from delivered goods but also the working capital they rely on to keep things running smoothly. For example, with a 10% profit margin, losing $200,000 could force a company to generate $2 million in additional sales just to recover. This kind of loss can disrupt supplier payments, payroll, and critical investments.
Often, these bankruptcies stem from factors beyond anyone’s control. Economic downturns, shifts in industry trends, or sudden market changes can push even financially stable customers into insolvency. For manufacturers heavily dependent on a few big clients, this risk is especially pronounced.
To safeguard against such financial shocks, manufacturers can turn to specialized insurance solutions.
How Accounts Receivable Insurance Can Help
Credit insurance acts as a financial safety net, protecting manufacturers when customers declare bankruptcy. With trade credit insurance, manufacturers can typically recover around 90% of the outstanding amount owed. This helps ensure cash flow remains steady, even when a major customer becomes insolvent.
This type of insurance covers receivables against losses from both bankruptcy and delinquency. If a covered customer files for bankruptcy, the policy compensates the manufacturer for the unpaid invoices, significantly reducing the financial blow.
"Accounts receivable insurance has allowed us to take on customers and transactions we wouldn’t have felt comfortable taking on by ourselves. It has not only allowed my company to take on larger deals, but be more liberal in terms, and the result has gone straight to our bottom line." – Mike Libasci, President, International Fleet Sales
The coverage extends to both domestic and export customers, ensuring manufacturers get paid no matter their customers’ financial circumstances. Beyond the immediate financial relief, credit insurance provides operational stability during these challenging times. Instead of scrambling to recover lost funds or cutting back on operations, manufacturers can stay focused on their business while the insurance absorbs the financial impact.
"We know that Allianz Trade will stand behind us in the event of a loss", said Jeff Green, CFO at Johnstone Supply.
With accounts receivable insurance, manufacturers gain tailored protection against customer insolvency. This allows them to confidently extend credit, knowing their receivables are secured. What could otherwise be a catastrophic event becomes a manageable situation, preserving both cash flow and business continuity.
2. Cash Flow Problems
Managing cash flow is critical for manufacturers to keep operations running smoothly. Late payments, however, can create a chain reaction that disrupts everything from paying employees to meeting supplier obligations. When customers delay payments, manufacturers face significant challenges in maintaining the financial stability needed for daily operations.
How Late Payments Hurt Daily Operations
Late payments are a growing issue for manufacturers worldwide. According to SAP Taulia‘s 2025 annual Supplier Survey, which included responses from over 9,000 businesses across 129 countries, only 41% of suppliers report receiving payments on time – a sharp drop from 54% in 2019. This trend has hit manufacturers hard, with 51% of suppliers frequently experiencing late payments and 20% facing delays of more than 30 days.
A 2021 QuickBooks survey revealed that mid-sized businesses in the U.S. had an average of $300,000 in late payments, with 89% reporting slowed growth as a result. For manufacturers, these delays lead to immediate challenges, such as postponing essential maintenance, scaling back production, or even passing up growth opportunities due to financial uncertainty.
Take, for example, a Pennsylvania manufacturer that encountered cash flow problems when two large invoices totaling $365,000 went unpaid. This situation disrupted their ability to pay suppliers and maintain production schedules.
The effects of late payments ripple through the entire supply chain. Suppliers, facing financial uncertainty, may hesitate to enter future agreements or impose stricter payment terms on manufacturers. On a global scale, late payments cost the economy $1 trillion annually, with 82% of companies experiencing moderate to severe disruptions in cash flow. For manufacturers specifically, 91.3% report losing 1–5% of revenue due to delayed payments.
How Credit Insurance Keeps Cash Flow Steady
To combat these cash flow challenges, many manufacturers turn to trade credit insurance. This type of insurance provides a safety net, ensuring that manufacturers receive payments even when customers delay or default.
Trade credit insurance guarantees compensation if a covered customer fails to pay, protecting manufacturers from the cascading effects of cash flow disruptions. This coverage applies to risks like insolvency and prolonged payment delays. By mitigating these risks, manufacturers can maintain steady cash flow and avoid operational setbacks.
Another key benefit is improved cash flow management. Trade credit insurance helps reduce Days Sales Outstanding (DSO) – the average time it takes to collect payments – giving manufacturers quicker access to working capital. It also eases the administrative burden of chasing overdue invoices.
Additionally, credit insurance offers insights into customer creditworthiness, helping manufacturers make informed decisions about extending credit or adjusting payment terms. This proactive approach reduces the likelihood of future payment delays.
For manufacturers looking to protect their operations, Accounts Receivable Insurance offers tailored solutions that safeguard cash flow for both domestic and international transactions. These policies ensure that manufacturers can maintain financial stability regardless of their customers’ locations.
The importance of credit insurance becomes even clearer during times of economic uncertainty. With U.S. business bankruptcies rising 23.5% in 2025 compared to 2024, manufacturers with credit insurance are better equipped to weather financial challenges. They can continue paying suppliers, meet payroll, and invest in growth opportunities, even when faced with delayed payments.
3. Reduced Access to Loans
For manufacturers, access to financing is essential. Whether it’s to keep operations running smoothly, invest in new equipment, or grow their business, funding plays a critical role. But without credit insurance, securing loans or credit lines can be an uphill battle. Banks often see uninsured receivables as risky collateral.
Why Banks Are Hesitant About Uninsured Receivables
When banks review loan applications, they focus heavily on a company’s receivables. These assets are a key measure of financial stability, but they come with risks. Lenders look at customer payment histories and other factors to decide how much capital they’re willing to extend. Receivables tied to international customers, concentrated sales to a few large buyers, or overdue accounts are often viewed as red flags.
The challenges are even greater for manufacturers with global clients. U.S. banks can’t enforce lien rights on foreign receivables, making them a much riskier form of collateral.
"Financial institutions often won’t offer credit terms for lending on accounts receivable unless the company has insurance on those receivables".
This is where credit insurance steps in, providing the assurance banks need to feel more secure about lending.
How Credit Insurance Boosts Borrowing Potential
Credit insurance helps manufacturers overcome these hurdles by offering banks the confidence they require. When receivables are insured, lenders know they’ll recover their funds – either from the borrower or through the insurance policy itself. This assurance can lead to better borrowing terms. For instance, a lender might increase the margin ratio from 75% to 90% when trade credit insurance is in place. For a manufacturer insuring $10 million in receivables, that could mean an additional $1.5 million in available financing.
Doug Konop, CFO of Specialty Forest Products, highlighted this benefit:
"Having trade credit insurance allows us to have an entirely different – and much more comfortable – conversation with our financial partner".
Insured receivables not only give lenders peace of mind but also improve financing rates and borrowing conditions. Gary Lorimer, Head of Business Development for Aon Credit Solutions, pointed out the growing importance of this protection:
"As the government support schemes taper off, the market expects to see the levels of insolvency increase; and having trade receivables backed by insurance as an asset will become even more important as time goes on".
Bohdan Sosiak, Managing Partner at Risk Protection International, elaborated further:
"Lenders tend to finance buyers up to a percentage of the insured value. Working with a specialist broker helps obtain your best policy for optimal buyer coverage, maximizing financing, and expanding your global footprint".
By insuring receivables, manufacturers not only safeguard their cash flow but also enhance their financial leverage. This added flexibility allows them to chase new opportunities and take on contracts they might have otherwise passed up.
Accounts Receivable Insurance is tailored to meet the specific needs of banks and manufacturers alike. It helps convert receivables into reliable collateral, reducing financing costs and opening up opportunities for growth. With coverage options for both domestic and international markets, manufacturers can secure the protection lenders require while maintaining the agility needed to thrive in competitive markets.
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4. International Trade Risks
Expanding into global markets presents exciting opportunities for U.S. manufacturers, but it also introduces financial risks that don’t come with domestic sales. Without credit insurance, manufacturers selling abroad put their cash flow and financial stability in jeopardy. Let’s dive into the unique challenges of exporting and how credit insurance can help safeguard against these risks.
Export Challenges for U.S. Manufacturers
Selling internationally comes with a host of challenges that can turn profitable deals into financial pitfalls. One of the biggest concerns is political instability. Events like civil unrest, economic sanctions, or sudden government changes can lead to foreign buyers defaulting on payments. On top of that, currency fluctuations can wreak havoc – what looks like a lucrative contract today might become a financial loss tomorrow due to unfavorable exchange rate changes.
The numbers paint a stark picture. Research shows that 35% of small and medium-sized businesses experience payment delays exceeding 30 days when dealing with international buyers. Even more concerning, 25% of business bankruptcies are tied to payment defaults. For manufacturers operating on tight margins, these risks are not just theoretical – they’re existential threats.
Legal hurdles add another layer of complexity. Different countries have their own laws governing customs, contracts, currency regulations, and intellectual property. A shipment might get stuck at customs due to sudden regulatory changes, or a manufacturer might find their contract unenforceable under local laws. Quality disputes are another headache – language barriers and differing expectations can lead to rejected shipments and payment disputes.
Assessing a foreign buyer’s creditworthiness is no easy feat. Reliable credit information on international customers is often scarce, leaving U.S. manufacturers unable to accurately gauge payment risks. Historical events like Brexit and global financial crises show how quickly international trade conditions can deteriorate. These risks highlight the need for a strong safety net to protect manufacturers from potential losses.
How Credit Insurance Protects International Sales
Export credit insurance serves as a safety net, turning major international risks into manageable concerns. This specialized insurance covers both commercial risks (like buyer insolvency, bankruptcy, or extended payment delays) and political risks (such as war, terrorism, currency inconvertibility, and changes in trade regulations).
Most export credit insurance policies cover up to 95% of losses. This protection allows manufacturers to pursue global opportunities with confidence, knowing they’re shielded from some of the most common causes of non-payment.
"Export credit insurance is a specialized type of insurance designed to protect businesses from the risk of non-payment by foreign buyers. If a buyer fails to pay due to insolvency, political instability, or other unexpected issues, export credit insurance ensures that the seller still receives payment. This protection helps maintain cash flow and financial stability".
By securing their receivables with credit insurance, manufacturers can offer more attractive payment terms to international buyers, such as open account terms, instead of demanding cash upfront or letters of credit. This flexibility often becomes the deciding factor in winning overseas contracts.
Ori Ben-Amotz, Chief Financial Officer of Hadco, highlighted this advantage:
"With [accounts receivable] insurance, we don’t have to ask for cash up front or payment on delivery, which makes us much more competitive. This is the tool we needed to take more market share from our competitors".
The cost of this protection is surprisingly affordable. Multi-buyer policies typically cost less than 1% of insured sales, making them an accessible option for most manufacturers. While single-buyer policies may have higher premiums due to increased risk, the peace of mind they provide often outweighs the cost.
Accounts Receivable Insurance (ARI) specializes in creating tailored export credit insurance solutions for U.S. manufacturers. With a global network of credit insurance carriers and deep expertise in both domestic and international markets, ARI helps manufacturers navigate the challenges of global trade. Their comprehensive risk assessments and claims management services allow manufacturers to focus on growing their export business without constantly worrying about payment risks. By partnering with ARI, manufacturers can confidently expand into international markets while safeguarding their financial health.
5. Poor Customer Credit Information
Manufacturers face more than just operational delays and global uncertainties – they also grapple with the serious challenge of poor customer credit data. Making credit decisions without solid financial information is like navigating in the dark, and it exposes businesses to considerable financial risks. Many manufacturers take leaps of faith, extending credit based on outdated data, gut instincts, or incomplete information. This gap in reliable credit intelligence can lead to financial disasters.
Risks of Limited Financial Information
When manufacturers operate without detailed customer financial data, they open themselves up to cash flow issues that can spiral out of control. The numbers paint a troubling picture: one in four bankruptcies happens because invoices go unpaid, and half of all invoices are paid late. These aren’t just numbers – they represent businesses that failed simply because they couldn’t collect what they were owed.
The situation is even trickier when dealing with private companies, which aren’t required to share their financial statements like public corporations. Unlike public entities that file quarterly reports, private businesses can keep financial struggles under wraps until it’s too late. A manufacturer might think they’re working with a stable partner, only to find out months later that the customer has been battling cash flow problems for years.
Without proper credit checks, manufacturers risk extending credit to customers with histories of late payments, defaults, or even looming bankruptcies. Incomplete financial data makes it nearly impossible to assess risks accurately or spot market trends that could signal trouble.
The financial sector offers a cautionary tale: poor data quality costs organizations in this industry an average of $15 million annually. For manufacturers, who often operate on slimmer profit margins, even a small fraction of such losses can have devastating effects. On top of that, manufacturers typically wait an average of 72 days to get paid, compounding financial stress and threatening day-to-day operations.
The absence of reliable credit information doesn’t just hurt cash flow – it also disrupts strategic decision-making. Manufacturers might unknowingly offer favorable payment terms to high-risk customers while being overly cautious with reliable ones. This imbalance can lead to missed sales opportunities and a weakened position in the market.
Getting Better Credit Information Through Insurance Providers
Credit insurance providers offer more than just coverage – they deliver access to advanced credit intelligence networks that most manufacturers couldn’t establish on their own. Today, 14.2% of businesses globally rely on trade credit insurance, largely because of the superior credit insights these providers bring to the table.
These insurers leverage advanced data analytics and continuous monitoring to evaluate customer financial health. They don’t just offer static credit checks – they provide ongoing updates and tailored coverage, along with early warning systems to flag potential issues before they snowball into payment crises.
"Safeguard your organisation by gaining insight into stakeholder creditworthiness before contracts are signed. Get a reliable picture of the financial status of any business partner. Target the right prospects who are most likely to become fast-paying customers and ensure more reliable cash flows".
Modern credit risk analysis has evolved far beyond traditional credit scores. Insurance providers use trend analysis, including factors like business performance, market conditions, and broader economic indicators, to forecast future risks. They also integrate advanced technologies like CRM tools and machine learning to quickly highlight transactional patterns and uncover hidden risks that conventional methods might miss.
"We can’t predict the future. But we can help you understand and analyze the risks associated with proper customer payment while guaranteeing you first-class protection. When you partner with Coface, you have access to all the qualified information and assessments you need to manage your credit decisions. This means you can offer competitive credit terms with complete confidence".
Conclusion: Protecting Your Business with Credit Insurance
The financial risks we’ve discussed – customer bankruptcy, cash flow disruptions, reduced borrowing power, challenges in international trade, and unreliable credit information – can significantly impact a business’s stability. With business bankruptcies in the U.S. rising by 23.5% in 2025 compared to the previous year, the urgency to safeguard your business has never been greater.
Receivables, which often make up a substantial portion of a company’s assets, are too important to leave exposed. For manufacturers operating without credit insurance, the stakes are high – essentially putting a large portion of their business’s value at risk.
Credit insurance offers a practical solution by mitigating non-payment risks and improving a company’s appeal to lenders. This type of coverage not only protects against potential losses but also strengthens financial positioning, enabling businesses to grow confidently in both existing and new markets.
What’s more, credit insurance is surprisingly cost-effective. Premiums typically amount to just a fraction of one percent of a company’s sales, making it a viable option for manufacturers of all sizes.
The right policy provides tailored solutions that address the unique needs of manufacturers. Accounts Receivable Insurance, for example, offers protection for both domestic and international markets. These policies include risk assessments, claims management, and connections to a global network of carriers. Insured receivables transform into more secure assets, helping manufacturers solidify their balance sheets while pursuing growth opportunities with greater confidence.
As financial risks continue to grow, credit insurance becomes more than just a safety net – it’s a strategic decision. Manufacturers face a choice: absorb the risks or proactively manage them to protect revenue and fuel growth. In today’s uncertain economy, credit insurance isn’t just about safeguarding assets; it’s a tool for driving sustainable success.
FAQs
How can credit insurance protect manufacturers if a customer goes bankrupt?
Credit insurance offers manufacturers a safety net by covering losses from unpaid invoices if a customer files for bankruptcy. If a customer becomes insolvent, this type of insurance can cover up to 90% of the outstanding debt, helping maintain stable cash flow and reducing financial uncertainty.
With this coverage in place, manufacturers can extend credit to their customers with greater confidence, knowing they have protection against significant financial risks. Beyond that, credit insurance often includes valuable insights into a customer’s creditworthiness, enabling manufacturers to make smarter decisions about payment terms and better manage potential risks.
What are the advantages of credit insurance for manufacturers involved in international trade?
Credit insurance serves as a valuable safety net for manufacturers navigating international trade. It shields businesses from financial losses due to non-payment, helping maintain a steady cash flow even if a buyer fails to pay. This protection becomes especially important when dealing with foreign markets, where the risk of payment defaults can be higher.
Beyond just protection, credit insurers also offer valuable insights into the financial reliability of international buyers. This information helps manufacturers make smarter decisions and minimize the chances of bad debts. On top of that, credit insurance covers external challenges like political unrest or economic downturns, providing reassurance when operating in unfamiliar territories. By addressing these uncertainties, manufacturers can concentrate on expanding their business while keeping their financial footing secure.
How does credit insurance help manufacturers secure better financing options?
Credit insurance provides manufacturers with a safety net against the risk of customers failing to pay. This safeguard not only reduces financial uncertainty but also enhances the manufacturer’s appeal to lenders. With the reduced risk, lenders are more inclined to offer loans or credit lines with confidence.
By having credit insurance, manufacturers often gain access to better loan conditions, such as lower interest rates or higher credit limits. It also enables them to extend payment terms to their customers, which can boost sales without jeopardizing cash flow. Together, these advantages help improve financial stability and create opportunities for growth.
