Credit risk, where customers do not (or cannot) pay the company, is becoming a prominent risk affecting companies in Auckland.
Many businesses offer generous credit or payment terms to stay competitive, only to find themselves in hot water when customers fail to meet them. As a result, companies are using credit insurance to mitigate this risk.
It’s time your business considered it too.
What is Credit Insurance?
Credit insurance is a form of cover that protects businesses against losses that occur when customers fail to pay their debts. For example, if a client is unable to pay for whatever reason, the insurer can cover up to 90% of losses.
Essentially, the cover typically responds if a buyer becomes insolvent or simply fails to pay within the agreed terms. Credit insurance helps organisations safeguard their cash flow, stay financially stable, and keep their business running despite setbacks.
Why it Matters
For organisations dealing with larger invoices or relying on a few key customers, credit insurance is invaluable.
In today’s uncertain economic environment, businesses are increasingly exposed to risks such as insolvency, protracted default, and political or economic instability. Just in the first 10 days of January 2026, 61 stores announced they are closing or going into liquidation.
It’s not uncommon for businesses to have clients enter insolvency. But a single large unpaid invoice can absorb a significant portion of working capital, forcing business owners to delay supplier payments, cut staff, or seek emergency financing at high cost.
At a deeper level, these risks limit growth potential. Without protection, businesses may hesitate to extend credit to new customers or enter unfamiliar markets. This cautious approach can stop a company from expanding and reduce competitiveness. In contrast, businesses that are protected can grow without looking back.
Credit Insurance is a Strategic Tool
Here are some benefits of having credit insurance for your business:
Shielded from non-payments
One of the most significant benefits of credit insurance is cash flow protection. Credit insurance helps businesses recover unpaid debts and manage unexpected scenarios. It means that cash flow remains consistent, workers are paid, and debts are met.
More risk management
Another key advantage is improved risk management. Credit insurers typically conduct detailed credit assessments on customers and monitor their financial health on an ongoing basis. This reduces the likelihood of trading with financially unstable customers.
Supports business growth
With insurance coverage in place, owners can confidently expand into new markets or increase credit limits for existing customers. It gives the business a strong competitive advantage and creates better opportunities for stakeholders.
What Type of Businesses Suit Credit Insurance?
Credit insurance suits any type of business that:
Have payment terms for customers
Rely on a few large customer or client accounts
Are looking for more financial support from banks
Want to achieve growth without increasing risk
Are in the export business or planning to export goods and services
It’s Cheaper Than You Think
Many business owners believe credit insurance is costly, but this is not the case. Insurance premiums for the cover can range from 0.1% to 0.5% of insured turnover, which is much lower than the cost of a single bad debt.
In a market of uncertainties, having credit insurance is a smart move that allows your business to scale confidently and find leverage in the event of unpaid debts. Having a reliable broker who can guide you through your options is important to finding the right cover for your business.
Bonded NZ helps business owners stay ahead of risk with comprehensive, tailored business insurance. If you’re looking to protect yourself and your business, we offer a range of products suitable for your needs.
For more information about our credit insurance coverage, contact our team today.
