What Is Commerce Credit Insurance?
What Is Bad Debt Expense?
Bad debt expense occurs when a customer fails to pay what they owe, reducing a company’s accounts receivable and impacting cash flow. As businesses grow, relying on personal knowledge of clients becomes risky.
Many companies turn to credit insurance to protect against these losses, reduce recovery efforts, and support confident expansion into new markets.
Bad Debt Protection
While bad debt can’t be completely avoided, businesses can reduce risk by setting clear credit limits based on customer financial profiles.
This might include requiring prepayment or letters of credit for high-risk clients. Adjusting credit terms based on market conditions or customer payment history also helps protect cash flow and minimize financial losses.
What is Bad Debt Protection and Its Benefits?
Bad debt protection helps businesses reduce losses when customers struggle to pay their invoices, especially in cases of insolvency. It ensures that companies still receive payment even if a customer goes bankrupt.
However, it’s important to understand that this protection doesn’t cover all reasons for nonpayment—factors beyond insolvency, such as disputes or operational issues, may still pose a risk.
Commerce Credit Insurance vs. Bad Debt Protection
Scope of Coverage
Bad debt protection only applies when a customer goes insolvent. In contrast, commerce credit insurance also covers delays in payment (protracted default), even if the customer is still solvent.
Risks Covered
Commerce credit insurance protects against political risks, natural disasters, nonpayment before shipment, post-shipment losses, and consignment sales. Bad debt protection covers only insolvency-related losses.
Decision-Making Support
Commerce credit insurance includes access to credit data and risk insights to help businesses make better credit decisions. Bad debt protection offers no such tools.
Growth Enablement
By securing your cash flow, commerce credit insurance allows you to safely offer credit, grow into new markets, and attract lenders. Bad debt protection doesn’t support long-term expansion.
Flexibility and Customization
Commerce credit policies can be tailored to fit your industry, customers, and changing needs. Bad debt protection is usually one-size-fits-all.
Safeguard Your Business from Bad Debt with Credit Insurance
Bad debt can threaten your business’s financial stability, but it doesn’t have to. Commerce credit insurance helps reduce risk by protecting against nonpayment losses and supporting stronger credit management.
With this coverage, you gain the tools and insights needed to secure cash flow and protect your accounts receivable—keeping your business resilient and ready for growth.
Global Leader in Commerce Credit Insurance
WLC Insurance is a worldwide leader in commerce credit insurance, offering tailored solutions to help businesses manage risk and protect cash flow. Our services include accounts receivable insurance, bad debt protection, business debt collection, surety bonds, trade credit and cash flow management, excess of loss (XOL) coverage, and debtor insurance.
We also assist with recovering unpaid, overdue, or late invoices. With a focus on reducing trade risks and enabling smarter decisions, we empower companies globally to grow with confidence and security.