Credit Insurance
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Credit Insurance

Miran Jus
Academic Press, 2013
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Editorial Rating

7

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  • Insider's Take

Recommendation

Trade finance expert Miran Jus provides readers with a good understanding of the fundamentals of credit insurance and explains its significance to modern commerce. Greater competition and technological advancement have made credit insurance a cost-effective, dynamic and increasingly essential tool for handling trade risk. Jus outlines how credit insurance has evolved to its current standing as a widely used risk management tool that also offers companies a large array of important auxiliary services. Although this compact text lacks the structure to be a quick or easy reference guide, it certainly contains the bulk of the information executives would need to make informed decisions on how to protect their short-term trade receivables. This concise but thorough text will serve risk management professionals and managers whose global or domestic businesses involve trade on credit.

Summary

The Reality of Modern Commerce

Most business transactions involve some kind of credit, an agreement that at some stated point in time, a buyer will pay for a purchase. One of the biggest risks that a company faces in the course of everyday operations is that a buyer will default on this debt or cause the organization serious cash flow problems by not paying when the debt falls due. This uncertainty has the potential to eat away at profits, increase costs and even threaten a company’s future.

Trade receivables can constitute a major part of a company’s balance sheet, so insuring them, just as a firm insures its property and other major assets, seems logical. Credit insurance is the best way to insure receivables, and it adds value to a business in a number of ways. Various analytical models identify and assess credit risks, and firms can choose from among a number of ways to protect against and mitigate these threats. Credit insurance, one of the most important tools, allows companies to conduct trade in the knowledge that they have managed – or at least dampened – relevant commercial or noncommercial risks.

Globalization and Credit Insurance

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About the Author

Miran Jus is an executive director of Korona Power Engineering and an assistant professor of finance at the University of Ljubljana.

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