From back-office function to growth driver: How trade credit insurance turns payment risk into competitive advantage

GLOBAL trade is facing a period of sustained uncertainty. Geopolitical tensions and shifting supply chains are creating new risks for businesses operating across borders.

In recent months, disruptions to key shipping routes and ongoing trade frictions between major economies have added further pressure, complicating planning for companies that depend on cross-border trade.

For many companies, the challenge today is no longer limited to demand or pricing. It is whether customers can and will pay.

The strain is showing in the data. According to Coface, a provider of credit risk solutions, corporate insolvencies in Asia-Pacific increased by 12 per cent in early 2025. Payment delays are also becoming more common, adding to the pressure on cash flow and working capital.

“Global trade today is operating in a state of permanent uncertainty. Businesses are navigating a complex mix of geopolitical fragmentation, supply chain reconfiguration, persistently high input costs and uneven economic recovery across regions,” says Grishma Kewada, chief executive and country manager of Coface Singapore.

Protection against bad debts

In such a volatile environment, credit risk management has become critical. This is particularly the case for small and medium-sized enterprises (SMEs), where one bad debt can have a significant impact on operations.

Once seen mainly as protection against losses, credit risk management is now closely tied to growth strategies. Many businesses rely on offering credit terms to win and retain customers, and managing that risk effectively can determine how far and how fast a company is able to expand.

“Credit risk management has moved from being a back-office control function to a strategic priority for growth,” says Kewada.

Coface’s approach to managing trade credit risk reflects this shift. Rather than focusing solely on covering losses after they occur, the company combines insurance with real-time business information and ongoing risk monitoring.

“Businesses need more than protection after a loss. They need early visibility into emerging risks, real-time insights into the financial health of their customers and suppliers, and the confidence to make informed trade decisions,” explains Kewada.

This integrated approach enables companies to act earlier rather than reacting after a default. With better visibility into customer risk, businesses can adjust credit terms, reduce exposure or prioritise collections before issues escalate.

One example involved an exporter supplying customers across South-east Asia. Coface’s monitoring tools flagged early warning signals in one buyer’s financial position. Acting on these insights, the company adjusted its credit terms and limited its exposure. When the buyer later defaulted, the exporter avoided a significant loss.

For businesses operating internationally, this combination of insight and protection can make a tangible difference.

Vital Solutions, a Singapore-based company supplying customers in more than 100 countries, regularly extends credit to buyers in new markets where payment practices can vary widely.

“We regularly work with buyers in new markets where payment expectations and credit practices can vary significantly,” says Krishnan Varadarajan, CEO of Vital Solutions.

Real-time business insights

During the Covid-19 pandemic, some of its customers were unable to meet their payment obligations. Coface’s trade credit insurance helped mitigate the impact.

“When the pandemic disrupted global markets, Coface stepped in under our trade credit insurance policy and compensated us for about 90 per cent of the receivables,” says Varadarajan.

Beyond claims, the partnership has also influenced how Vital Solutions approaches growth. Access to credit assessments and risk insights is now part of its decision-making process, allowing it to pursue opportunities with greater confidence.

As businesses continue to navigate uncertainty, the ability to balance risk and growth is becoming more important. Trade credit insurance, supported by timely data and insights, offers a way to do both.

“As uncertainty becomes constant rather than cyclical, access to timely risk insights is increasingly important,” says Kewada.

“Trade credit insurance, supported by real-time business intelligence, plays a growing role in helping businesses protect cash flow while continuing to extend credit, expand across borders and pursue growth as conditions evolve in a rapidly changing global landscape.”

Find out how Coface can help your business.