My company conducts most of its sales on credit. How can I better protect myself against the risk of buyers defaulting on payment?

You can sign up for the Trade Credit Insurance (TCI) Programme by IE Singapore, which offers companies trade credit insurance at a more competitive premium that is usually reserved for companies with significant trade volumes.

Besides protecting your accounts receivables, the TCI Programme also offers financing to meet your company's working capital needs.

Trade credit insurance gives you assurance that you will be paid for goods delivered or services rendered.

You can then offer your customers more competitive credit terms and gain an edge over other suppliers who trade with letters of credit.

With greater certainty, you can also gain more confidence to explore new businesses and new markets.

Upon verification of the claim, the insurer will pay you should buyers default on payment past the stipulated date and grace period.

With insured accounts receivables, your company is also likely to achieve more attractive buying costs and larger credit lines from your bankers.

Trade credit insurance is suitable for companies that are manufacturers, traders, or suppliers of goods and services.

Your sales can either be domestic or export-oriented. All Singapore-based companies are eligible to purchase trade credit insurance through the TCI Programme.

The average premium rates are between 0.18 per cent and 0.35 per cent. You can apply for trade credit insurance alone, or trade credit insurance plus trade financing facilities.

If you are applying for trade credit insurance alone, 70 per cent of the upfront insurance premium will be prepaid by IE Singapore via an advance.

You will have to pay the insurance premium and associated administrative fees. To apply, please contact the programme manager, Marsh (Singapore).

For companies that require both financing and trade credit insurance, please approach DBS Bank (Tel: 1800 222- 2200) or Standard Chartered Bank (Tel: 1800 743-3000).

For inquiries, please visit www.business.gov.sg or e-mail enterpriseone@spring.gov.sg

This article was first published in The Straits Times on 9 July 2008.