“Ever wondered why trade disputes are such an issue for both credit insurers and factoring companies?

Both credit insurers and factoring companies assume there is an asset as a basis for their services (risk transfer, financing, etc.). However, a trade dispute means that your asset (the trade receivable) may not exist, unless proven either by out-of-court agreement or via legal action.

The general rule is – if it cannot be proven in court that your buyer owes you the amount claimed, then there is no basis for an insurance claim payment as there is no underling receivable (asset). But this is a fundamental problem (proving your trade receivable) that will be yours to solve – with or without trade credit insurance (or factoring for that matter). In other words, trade disputes are not a risk that can be transferred, so you should manage it.

You should have in mind that genuine trade disputes are rare. However, some financially challenged buyers may resort to raising a trade dispute in order to delay the collection process.

We help our clients prevent trade disputes by sharing proven risk mitigation strategies and simple yet effective prevention tools.

We can also assist with taking over the discussions with the insurers if we indicate a fake trade dispute, in order to speed up the claim settlement process. “