Trade Credit Insurance for Debt-Stressed Markets

Corporate Debt Is Climbing. So Is the Risk to Sellers.

Corporate America is sitting on more debt than ever.

As of Q1 2025, nonfinancial corporate debt in the U.S. exceeded $14.3 trillion (FRED: BCNSDODNS). This figure is up more than 25% from pre-pandemic levels, and it continues to rise despite higher interest rates.

For companies selling on net terms, this matters. Buyers struggling to refinance or make payments are more likely to default, especially when hit with unexpected shocks. That puts sellers’ receivables at risk—and puts cash flow in jeopardy.

Trade credit insurance solutions provide a way to stay protected.

The Leverage Problem: What the Data Shows

Debt service is becoming harder to manage.

According to FRED, the interest coverage ratio for U.S. nonfinancial corporations has declined significantly over the last three years. At the same time, the ratio of nonfinancial business debt to GDP is hovering near historic highs (FRED: NCBEILQ027S).

This is a key signal for suppliers. The higher the leverage, the greater the risk that buyers will delay payment or go insolvent.

These risks don’t only affect headline-grabbing borrowers. Middle-market and private companies—especially those with floating-rate debt—are facing steeper refinancing hurdles and thinner cushions.

Our guide to trade credit insurance explains how this tool helps sellers manage that exposure.

How Trade Credit Insurance Protects Sellers

Trade credit insurance covers the risk that a customer fails to pay. If a buyer defaults, becomes insolvent, or stretches payment beyond a covered term, the insurer steps in to reimburse a portion—often 90% or more—of the invoice value.

This transforms receivables from a vulnerable asset into a secured one. Coverage can apply to domestic or international customers and can be tailored to fit specific industries or account exposures.

It also makes receivables more bankable. With insured accounts, lenders may offer improved borrowing terms or higher advance rates—freeing up working capital.

Read how export credit insurance supports global sellers.

A Real-World Scenario

Suppose a U.S. manufacturer is selling into the retail sector. One of their key buyers has been expanding aggressively and now carries a high debt load. As interest rates climb, the buyer starts delaying payments. Rumors circulate about upcoming layoffs and vendor payment freezes.

Rather than cut them off entirely, the manufacturer insures that account. If the buyer defaults, the policy kicks in and the manufacturer collects a large portion of the unpaid invoice. Their cash flow stays intact, and they avoid a painful write-off.

For lenders working with receivables-backed lines, this kind of coverage also offers peace of mind. Learn about our insurance for lenders and how policies can enhance collateral packages.

Business Benefits of Trade Credit Insurance

• Reduces the risk of bad debt

• Secures cash flow from missed or late payments

• Enhances borrowing capacity with insured A/R

• Enables safer growth into high-risk or leveraged markets

• Strengthens risk management during economic uncertainty

Watch our video on Understanding Trade Credit Insurance for more insights.

Conclusion

Corporate debt is rising. Interest burdens are heavier. And sellers who extend terms are being pulled into this pressure.

Trade credit insurance provides protection where financial statements alone fall short. It gives businesses the ability to sell confidently, even in markets under stress.

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

You can also explore our trade credit insurance solutions for more information.

FAQs

Does trade credit insurance work for U.S. domestic sales?
Yes. Domestic policies protect against protracted default and insolvency from U.S.-based buyers. Visit our trade credit insurance page to learn more.

How is pricing determined for a credit insurance policy?
Premiums are based on insured sales volume, buyer risk profiles, country exposures (if international), and claims history. Each policy is tailored to fit the business.

Can I insure just one customer?
Yes. Many businesses begin with single-buyer coverage, especially if one account represents a large share of risk.

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.