What’s the biggest risk to your business in 2025? Most business owners will think of theft, fire or cyber attacks. But what if we told you the real danger isn’t any of those – it’s unpaid invoices.
In an economy where businesses are relying more and more on credit terms and consumers buy now, pay later credit platforms like PayJustNow and Float are growing, the risk of non-payment has never been higher.. One defaulting client can have a ripple effect through your business, impacting cash flow and growth. That’s why trade credit insurance is one of the most important tools for businesses in South Africa to manage uncertainty.
In this article we’ll look at how trade credit insurance works, why it’s more important than ever in 2025 and how it can protect your business from the financial burden of unpaid debts.
2025 Will Be a Crucial Year for Businesses
South Africa’s Changing Economic Landscape
South Africa’s economy is changing. Inflation, interest rates and global market volatility are putting pressure on businesses and many are being forced to offer credit terms to stay competitive. But this reliance on credit creates vulnerabilities especially when customers are also under financial pressure.
And businesses are operating in a more competitive space. Businesses that don’t manage their cash flow will not survive in this environment.
The Rise of Consumer Credit
Platforms like PayJustNow and Float have changed how consumers access credit and can now buy now pay later through interest free installments. While these services are convenient they also mean consumers are over extending themselves financially. For businesses offering credit terms this growing reliance on consumer credit adds another layer of risk.
When clients are relying on these platforms, any financial blip – job loss or unexpected expenses – can mean missed payments. For businesses that need cash flow, this is a big problem.
The Domino Effect of Unpaid Invoices
One unpaid invoice might seem small but the consequences can snowball quickly. For example when a retailer defaults on payments to a supplier, the supplier may not be able to pay its own vendors, employees or lenders. This domino effect can break a supply chain and create financial instability for multiple businesses.
Trade credit insurance is the safety net, otherwise the risk is too great.
What is Trade Credit Insurance?
Non Payment Protection
Trade credit insurance is designed to protect you from the financial impact of unpaid invoices. Whether it’s insolvency, delayed payment or client default, this type of insurance will pay you back for your losses. It’s especially important in industries where offering credit terms is key to being competitive.
For South African businesses where economic volatility can lead to client financial instability, trade credit insurance is more than a safety net – it’s a business essential for stability and growth.
How it Works
Trade credit insurance works like this:
- Client Credit Assessment: Before you offer credit terms, your insurer will assess the creditworthiness of your clients to reduce the risk.
- Policy Setup: You set up a policy that covers specific clients or all credit sales depending on your business needs.
- Claims and Payment: If a client defaults or becomes insolvent, the insurer pays you, so your cash flow stays intact.
This simple process gives you peace of mind so you can focus on growth without worrying about financial setbacks from non payment.
Benefits for South African Businesses
Trade credit insurance has many benefits for South African businesses:
- Cash Flow Security: Even if clients default, you can maintain your cash flow and meet your obligations.
- Confidence to Offer Credit Terms: Competing in today’s market means flexible payment terms. Trade credit insurance lets you offer these without putting your business at risk.
- Support for Growth: Whether you’re entering new industries or international markets, this insurance gives you the security to grow.
Real-Life Scenarios: Trade Credit Insurance in Action
Example 1: The Local Supplier
Scenario: A supplier selling on credit to a large retailer finds itself in trouble when the retailer is financially struggling. The retailer, overextended due to its reliance on consumer credit platforms like PayJustNow, doesn’t pay its invoices on time.
How Trade Credit Insurance Helps: The supplier’s trade credit insurance policy pays the unpaid invoices so the supplier can continue paying its own vendors and staff without interruption.
Example 2: The Exporter
Scenario: A South African business exporting to an international market faces geopolitical and economic instability and one of its overseas clients defaults.
How Trade Credit Insurance Helps: The policy pays the unpaid invoices so the exporter can maintain cash flow and keep trading despite the international risks.
Example 3: The Growing Business
Scenario: A business rapidly expanding into new markets and offering credit terms to new clients encounters issues when some customers fail to pay on time.
How Trade Credit Insurance Helps: The insurance provides financial protection, covering the unpaid amounts and enabling the business to focus on growth without the fear of financial setbacks.
Why Trade Credit Insurance is Critical in 2025
Economic Volatility and Non-Payment Risks
In 2025 the world is uncertain. South Africa’s economy is recovering but the global market is still unpredictable. Many companies are facing delayed payments or client insolvencies, trade credit insurance is a must have to navigate these challenges.
One client default can have a domino effect on your business. Trade credit insurance will mitigate those risks so your cash flow is protected from economic fluctuations.
Supporting Growth
For companies looking to enter new markets or take on bigger clients, trade credit insurance gives you the confidence to offer credit terms. Instead of worrying about defaults you can focus on growing your business knowing your safety net is in place.
Financial Management
Beyond the cover, trade credit insurers often provide valuable credit management insights. They help you assess the creditworthiness of your clients so you can make informed decisions on who to extend credit to and ultimately improve your financial planning and reduce risks.
Why choose Berkley Risk for Trade Credit Insurance?
Personalised Advice
Berkley Risk isn’t just about insurance solutions – we’re about the right solutions. We take the time to understand your business’s specific risks and work with you to create a policy that covers what matters most.
Ongoing Risk Management
We don’t stop once the policy is in place. We monitor your clients’ creditworthiness, offer proactive risk management strategies and guide you through the claims process if needed.
Proven Expertise in South Africa
With deep knowledge of the South African market, Berkley Risk is uniquely positioned to help businesses navigate the challenges of credit management in a dynamic economic environment. We’re here to ensure that your trade credit insurance supports both your immediate needs and your long-term goals.
Contact Berkley Risk today to learn how we can help protect your business in 2025 and beyond.
Steps to Get Started with Trade Credit Insurance
Check Your Business’s Exposures
First things first, you need to know where you’re exposed. Review your accounts receivable, identify clients with payment risk and assess your overall credit portfolio.
Talk to an Advisor
Trade credit insurance isn’t one size fits all. Work with an advisor like Berkley Risk and we’ll get you a policy that’s right for you whether you’re insuring a few big ticket clients or your entire credit portfolio.
Protect Your Cash in 2025
Don’t wait until a client defaults to act. By getting trade credit insurance now you can protect your cash flow, strengthen your financial position and set your business up for growth in the year ahead.
Summary
As businesses navigate 2025 trade credit insurance is one of the most important tools to protect your financial stability. From protecting against unpaid invoices to enabling growth it’s the safety net every business needs in an uncertain world.
Berkley Risk specialises in helping South African businesses secure the right trade credit insurance solutions. Don’t let unpaid invoices derail your business—get in touch with us today and ensure your business is ready for whatever 2025 brings.
FAQs: Trade Credit Insurance
1. What is trade credit insurance?
Trade credit insurance protects businesses from financial losses due to unpaid invoices. This includes non-payment caused by client insolvency, delayed payments, or defaults.
2. Who should consider trade credit insurance?
Any business offering credit terms to clients should consider trade credit insurance. It’s particularly valuable for companies in industries with high credit exposure or those expanding into new markets.
3. Does trade credit insurance cover all unpaid invoices?
Coverage depends on the policy. Some policies cover specific clients, while others protect your entire credit portfolio. Discussing your needs with an advisor ensures the right level of coverage.
4. Can trade credit insurance help with international clients?
Yes, trade credit insurance is especially useful for businesses dealing with international markets, where risks like currency fluctuations or geopolitical instability can impact payments.
5. How can I get started with trade credit insurance?
The best way to start is by assessing your current credit risks and consulting with an advisor like Berkley Risk. They can guide you through the process of selecting and managing the right policy.
