Accounts Receivable Insurance for Manufacturers

The Hidden Risk Inside Every Manufacturer’s Balance Sheet 

Many manufacturers operate on tight margins. Materials, labor, energy, logistics—costs climb while customer demands grow more aggressive. Yet one of the biggest risks isn’t found on the production floor or in the supply chain. It’s buried inside accounts receivable. 

When a buyer fails to pay, the consequences ripple fast: strained cash flow, delayed supplier payments, restricted borrowing capacity, and in worst cases, layoffs or plant shutdowns. That’s where accounts receivable insurance—also known as trade credit insurance—becomes a critical financial tool. 

Our trade credit insurance solutions protect receivables, giving manufacturers stability even when customers default. 

According to Global Trade Review (GTR), payment defaults across global supply chains have risen sharply in recent years, driven by economic volatility, shifting buyer behavior, and geopolitical shocks. Manufacturers are often caught directly in the middle of this credit risk chain. 

Why Manufacturers Carry Elevated Receivables Risk 

Unlike service businesses, manufacturers often extend substantial open credit terms to customers to secure orders and maintain competitiveness. This creates a delicate balancing act: 

• Customer concentration risk. Losing one large buyer can be catastrophic. 

• Extended DSO (Days Sales Outstanding). The longer receivables sit, the greater the default risk. 

• Cross-border complexity. International buyers introduce added currency, legal, and political exposures. 

• Limited credit transparency. Private company customers may not disclose accurate financials. 

In highly specialized sectors—capital equipment, OEM components, aerospace, automotive, electronics—even a single unpaid invoice can result in outsized losses. Trade credit insurance serves as a stabilizer against these credit exposures. 

Our guide to trade credit insurance provides a deeper dive into how policies are structured and priced. 

How Accounts Receivable Insurance Shields Manufacturers 

Accounts receivable insurance works by protecting manufacturers against non-payment from both domestic and foreign buyers. The insurer underwrites the buyer portfolio, monitors their creditworthiness, and pays claims if covered customers fail to pay due to insolvency, protracted default, or political risk events. 

Export credit insurance supports manufacturers expanding globally, providing an additional layer of risk mitigation for foreign sales. 

Key advantages include: 

• Balance sheet protection: Insured receivables become more secure assets. 

• Improved borrowing terms: Banks often lend more against insured A/R. 

• Growth enablement: Companies can safely pursue larger orders and new customers. 

• Portfolio transparency: Insurers’ credit monitoring supplements internal credit processes and procedures. 

• Fraud detection support: Sophisticated underwriting can identify red flags early. 

As reported by Business Insurance, many middle-market manufacturers are increasing their credit insurance usage amid today’s uncertain economic environment, using policies both defensively and offensively to support growth. 

Real-World Scenario: The OEM That Dodged a Major Default 

A precision components manufacturer was poised to ship $1.2 million in parts to a new overseas buyer. Their credit manager approved the deal, but their trade credit insurer flagged emerging financial strain at the buyer’s parent company. The shipment was paused pending updated financials, which revealed deeper liquidity issues. The order was ultimately reduced and secured with upfront deposits, avoiding a significant exposure. 

Without insurance oversight, that $1.2 million receivable could have turned into a painful credit loss. 

Business Benefits at a Glance 

• Protects cash flow from buyer insolvency or late payment 

• Supports borrowing against insured receivables 

• Enables confident sales growth to new customers and markets 

• Reduces credit monitoring workload via insurer oversight 

• Strengthens risk management and balance sheet stability 

• May prevent fraud exposure through independent buyer vetting

Watch: How Trade Credit Insurance Protects Manufacturers

In this brief video, we explain how accounts receivable (trade credit) insurance works, and why it’s becoming an essential tool for manufacturers to secure growth while minimizing risk.

Take Control of Your Receivables Risk 

In today’s uncertain manufacturing landscape, uninsured receivables represent a hidden form of risk. Accounts receivable insurance allows manufacturers to extend credit- fueling safer growth. 

Contact us today to learn how we can help protect your business. 

Frequently Asked Questions 

Is accounts receivable insurance the same as trade credit insurance? 

Yes. The terms are used interchangeably. Both refer to insuring receivables against customer non-payment. 

Can manufacturers insure both domestic and international sales? 

Absolutely. Policies can cover domestic receivables, export sales, or both—customized to fit your customer portfolio. 

Does credit insurance replace internal credit management? 

No. It complements your credit team by adding external monitoring, underwriting discipline, and payment protection. 

Explore our trade credit insurance solutions in more detail. 

Disclaimer:

This blog post is meant to be informative and provide helpful tips and insights into credit insurance policies.  It is not meant to supersede any policy requirements.  Please consult your credit insurance policy for all requirements including claim filing deadlines and required documentation.

Since 2004, Securitas Global Risk Solutions, LLC (“Securitas”) has helped clients develop credit and political risk transfer solutions that provide value on numerous levels. As an independent trade credit and political risk insurance brokerage, Securitas is focused on developing comprehensive solutions that meet the needs of clients, ensuring a complete understanding of policy wording and delivering excellent responsive service.