Strengthen business resilience through strategic trade credit protection with NCI

The company helps businesses protect receivables, preserve cash flow, and manage rising insolvency risks.

Singapore has witnessed a notable surge in business insolvencies, with liquidations in the first half of 2025 surpassing figures from the same period over the past five years. For many companies, this presents a critical risk to liquidity and operational stability, particularly for those exposed to distressed entities.

In this context, trade credit insurance has become an essential tool, enabling businesses to protect receivables, manage credit risk, and maintain resilience in an increasingly volatile market.

Securing business assets

By protecting a company’s debtor ledger, which is one of its largest assets, trade credit insurance safeguards against insolvency and payment defaults, preserves cash flow, and provides businesses with the confidence to expand, even when trading with new or international buyers.

Ronnie Lau, CEO of NCI Singapore, highlights that rising insolvency levels have tangible repercussions across supply chains, with unsecured suppliers potentially facing liquidity challenges. Recent closures, including high-profile names such as Twelve Cupcakes, Wan Yang, and Jollibean, illustrate that even well-known businesses are vulnerable. The key lies in proactive risk mitigation, particularly in securing trade receivables.

“What is required is an exploration of the company’s risk mitigation practices, especially towards their trade receivables, and they need to assess if they are sufficiently secured and limited towards the impact of the risks of their clients failing and hence impacting their balance sheet,” said Lau.

Trade credit insurance provides companies with essential protection for their debtor ledgers, which often form a substantial part of current assets. Unlike other assets such as cash deposits or inventory, trade receivables are typically unsecured, leaving creditors exposed to the operating environment and financial health of their debtors.

“In times of debtor distress or insolvency, the insurer can provide assistance in collections for insured debts,” Lau explained. “In the event of non-collection of the insured debt, the insurer will pay a claim towards the valid insured debt, mitigating the risk of financial loss.”

This protection is particularly critical for exporters, where pursuing debts in foreign jurisdictions can be uneconomical. Traditional recourse, such as engaging debt collection companies, does not guarantee recovery and often incurs additional costs. By subscribing to trade credit insurance, companies can secure their receivables, reducing the risk of financial loss and ensuring that cash flow and balance sheets are safeguarded.

Strengthening liquidity and cash flow

Beyond risk mitigation, trade credit insurance preserves liquidity and supports cash flow. Insured receivables can also serve as collateral for financing, whilst claim payouts alleviate cash flow issues arising from non-payment, reducing bad debt costs and strengthening financial stability. The coverage also enables businesses to trade confidently with new or unfamiliar buyers, capturing revenue opportunities competitors may hesitate to pursue.

Securing appropriate coverage requires specialist expertise. Lau compares this to engaging expert consultants across different business functions. “The specialist investigates various concerns relating to the specialisation and allows the focus unit to perform what they do best and offers bespoke solutions for the related concerns,” he remarked.

In early 2025, NCI incepted a policy for a client after detailed discussions to understand their business structure and credit risks. Customised terms aligned the policy with operational needs, providing essential risk mitigation whilst enabling the client to trade confidently. When buyers became insolvent a few months later, claims on valid debts were promptly paid, preserving cash flow, limiting losses, and demonstrating how tailored credit insurance can both protect and support growth.

NCI also provides holistic support in credit management and risk assessment. “NCI prides itself as a one-stop Trade Credit Solutions provider,” Lau affirmed.

Leveraging advanced IT systems and an in-house Credit Risk Management team, NCI assists clients with buyer onboarding, credit analysis, and credit reports on entities worldwide. This integrated approach enables companies to manage both domestic and international trade exposures.

Proactive risk management support

Looking ahead, NCI underscores that trade credit insurance is an active risk management tool. “NCI seeks to engage with our clients regularly to keep abreast of their business requirements as well as credit pain points,” Lau emphasised.

Each business operates under its own unique model, with distinct requirements that demand tailored solutions. By continuously engaging with clients, NCI can explore and implement solutions tailored to their specific needs, helping them manage emerging risks, navigate rising insolvencies, and maintain liquidity, profitability, and operational resilience.