Why insolvency risk weighs on B2B sales
Selling on credit is the norm in Swiss B2B trade: payment terms of 30, 60, or 90 days, established customers and new business partners coexist in the same receivables portfolio. Every invoice issued and not collected represents a financial exposure that, in the event of debtor insolvency, becomes a straight loss.
For an SME, a single customer bankruptcy can erode months of operating margin and jeopardize the liquidity needed to pay suppliers, wages, and social contributions. The most common response — tightening credit limits or refusing new orders — protects the balance sheet but slows growth precisely when the company wants to expand.
Trade credit insurance offers a different balance: transfer at least part of the insolvency risk to a specialized insurer, while maintaining competitive payment terms and a growth-oriented commercial policy. This guide explains how it works in Switzerland, what it covers, how much it costs, and how to integrate it into credit management and accounting.
Comparison of credit protection instruments
Before taking out a policy, it is worth clarifying the alternatives available to an SME that sells mainly in Switzerland or abroad:
| Instrument | Mechanism | Main advantage | Limitation |
|---|---|---|---|
| Trade credit insurance | Policy with periodic premiums; indemnity in the event of certified debtor insolvency | Structured protection with per-customer risk analysis | Deductible, exclusions, and per-debtor limits to be observed |
| Allowance for doubtful receivables | Accounting provision based on internal estimates | Full flexibility, no external premium cost | Does not transfer risk; impacts profit before the loss event |
| Factoring / receivables assignment | Sale of the receivable to a factor that advances collection | Immediate liquidity and management of unpaid invoices | High financing cost; the customer may perceive liquidity strain |
| Bank guarantees / sureties | The debtor provides a guarantee from a financial institution | High security if the guarantee is solid | Difficult to obtain for SME customers; burden on the commercial relationship |
| Internal due diligence | Solvency check via commercial register extracts, ratings, payment history | Low cost; strengthens credit management culture | Does not cover sudden events (bankruptcy without warning) |
How a trade credit insurance policy works
In Switzerland, trade credit insurance policies are offered by specialized insurers (among the main providers: Allianz Trade, Swiss Re Corporate Solutions, Atradius, and brokers that distribute their terms). Contracts are governed by the ICA (Loi fédérale sur le contrat d'assurance — Federal Insurance Contract Act), which allows the parties to freely define coverage, deductibles, and exclusions, subject to the insurer's pre-contractual duty of disclosure and the insured's duty to report.
Turnover policy
Covers the entire customer portfolio or a defined segment (Switzerland, EU, worldwide). The premium is calculated as a percentage of insured turnover — typically between 0.1% and 1% depending on the sector, debtor profile, and claims history.
The insurer approves a credit limit for each debtor. Once that limit is exceeded, the credit remains uninsured unless an increase is requested. This is the most common formula among SMEs with a diversified portfolio.
Single-credit or key buyer policy
Designed when one or a few customers account for most of turnover. Dedicated coverage is negotiated for the risk of that specific commercial relationship — useful, for example, before a major multi-year contract.
The premium may be higher relative to volume, but avoids insuring total turnover when the risk is concentrated on a clearly identified party.
What is covered — and what is excluded
Basic coverage protects against non-payment due to formal debtor insolvency: bankruptcy (Konkurs) with liquidation under the DEBA (Federal Act on Debt Collection and Bankruptcy), composition proceedings (e.g. composition moratorium or composition with assignment of assets), or a foreign equivalent recognized by the policy. Some policies extend protection to protracted default, when the debtor is solvent but fails to pay beyond a time threshold defined in the contract.
For exporting SMEs, extensions are available for political risk (currency inconvertibility, payment moratorium, expropriation) and cross-border commercial risk. These elements must be explicitly negotiated: a domestic policy does not automatically cover foreign business.
Common exclusions to check in the contract
- •Contractual disputes: quality of goods, price disputes, or non-conforming delivery
- •Receivables from shareholders, directors, or related parties
- •Receivables arising before the policy effective date (unless a continuity clause applies)
- •Exceeding the approved limit without notifying the insurer
- •Failure to comply with the debt collection procedures required by the policy
Credit limits and debtor portfolio management
The added value of trade credit insurance goes beyond indemnity: the insurer performs a solvency analysis on customers and communicates a recommended credit limit. For the SME, this means objective support in commercial decisions, especially with new buyers or in high-risk sectors.
| Stage | Action | Responsibility |
|---|---|---|
| New customer | Request a limit from the insurer before or at the same time as the first significant order | Sales + credit administration |
| Order above the limit | Request an increase; the uninsured excess remains the company's liability | Credit administration |
| Monitoring | Review aging report; report significant delays to the insurer | Accounting / credit management |
| Insolvency | File a claim with documentation (invoices, deliveries, bankruptcy proceedings) | Administration + auditor if required |
| Post-claim recovery | Amounts recovered after indemnity must be returned pro rata to the insurer | Accounting |
Integrating insurance limits into your ERP or accounting software (such as Accountex) aligns actual credit exposure with active coverage, avoiding uninsured orders that sales staff may not be aware of.
Costs, deductible, and indemnity
Annual premium
Calculated on insured turnover. Low-risk sectors (stable B2B services) pay lower rates; construction, wholesale trade, and export to emerging markets see higher premiums.
Deductible
Fixed amount or percentage borne by the insured for each claim. A higher deductible reduces the premium but increases out-of-pocket costs in the event of insolvency.
Indemnified share
Typically between 80% and 95% of the certified unpaid receivable, net of the deductible. The remaining 5–20% maintains an incentive for credit selection.
To size the investment, compare the estimated annual premium with the average amount of at-risk receivables in the portfolio and with the maximum tolerable loss in the event of bankruptcy of the most exposed customer. If a single debtor exceeds 15–20% of annual turnover, a key buyer policy or a targeted limit increase deserves consideration.
Accounting in compliance with Swiss standards
Under Swiss accounting rules (Code of Obligations, Art. 957 et seq., and Swiss GAAP FER for mid-sized companies), trade credit insurance premiums are ordinary operating expenses and are recorded in the accrual period — typically under the "Insurance premiums" or "Other operating expenses" account.
In the event of a claim, the accounting process follows two distinct stages. Until the claim is filed and insolvency is certified, the receivable remains on the balance sheet; if there is concrete evidence of uncollectibility, a value adjustment on receivables (account 39x) may be recorded even before the insurance indemnity. When the indemnity is received, the amount is recorded as a reversal of the loss on receivables or as other operating income, depending on the treatment adopted and consistent with the chart of accounts.
Recoveries after indemnity (partial payments from the bankruptcy trustee or the debtor) must be accounted for separately: the insurer is entitled to a proportional share. Documenting each transaction with reference to the policy number and claim number facilitates auditor reviews and profit tax reporting.
Integrating the policy into the sales process
The most common mistake is treating credit insurance as a post-sale administrative task. To avoid slowing sales, it is better to incorporate it into the commercial workflow from the outset:
Prospect qualification
Sales checks whether the potential customer meets insurable criteria (sector, country, size). A shared checklist avoids proposals to debtors excluded from the policy.
Limit approval
Before confirming orders that exceed an internal threshold (e.g. CHF 10,000 or CHF 25,000), credit administration requests the limit from the insurer. Standard turnaround: from a few hours to 2–3 business days.
Consistent payment terms
Terms that are too long may reduce coverage or increase the premium. Aligning contractual terms with what is provided for in the policy strengthens your position in the event of a claim.
Monthly reporting of insured turnover
Many policies require periodic declaration of actual turnover for premium adjustment. Automating extraction from the VAT register or customer master ledger reduces errors and contractual penalties.
When it makes sense — decision checklist
Trade credit insurance makes economic sense when at least three of these criteria apply to your situation:
- ✓B2B credit sales exceed CHF 500,000 per year or represent more than 60% of total revenue
- ✓At least one customer accounts for more than 10% of turnover, or the portfolio includes foreign debtors
- ✓The sector records insolvency rates above average (construction, trade, manufacturing)
- ✓The bank makes an increase in credit line or working capital facility conditional on insurance coverage
- ✓Commercial growth requires accepting new customers without an established payment history
Practical next steps
Request at least two comparable quotes specifying turnover, geographic distribution of customers, NOGA/NACE sector, and credit loss history over the past three years. At the same time, map the aging of current receivables in your accounting software: knowing how much is exposed beyond 90 days is the starting point for negotiating appropriate deductibles and limits.
A well-calibrated policy does not replace internal credit management, but strengthens it — allowing the Swiss SME to sell with greater confidence, protect liquidity, and present a more solid risk profile to banks and business partners.