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Trade credit insurance: Protecting UK food and beverage companies against non-payment risk

Discover how trade credit insurance protects UK food & beverage companies from payment risks, secures cash flow, and supports confident business growth.

03/11/2025 · 4 minute read

The UK food and beverage industry operates within a complex risk environment, characterised by supply chain disruptions, fluctuating raw material prices, labour shortages, strict regulations, and evolving consumer preferences for healthier and ethically sourced products. In a sector where profit margins are often tight and cash flow challenges are frequent, trade credit insurance can protect companies by securing revenue streams and supporting growth ambitions.

Risk of extending credit beyond safe limits

In response to economic pressures, food and beverage companies often give substantial credit lines to clients beyond their comfort levels to maintain healthy cash flow. According to a survey conducted for Marsh’s Trade Credit Report 2025, 46% of financial directors in food and beverage companies said they grant customers larger credit lines than their credit management teams prefer “all the time,” while 52% said “sometimes.”

However, extending credit in large, concentrated contracts can create substantial cash flow vulnerabilities. The risk of late payments or defaults due to customer insolvency or financial distress can disrupt working capital and strain liquidity. Additionally, the costs associated with debt collection can be high. 

What is trade credit insurance?

Trade credit insurance protects businesses against the risk of non-payment by companies for services rendered or goods sold on credit. While it is primarily seen as a protection tool, if used properly, it offers much more.

A well-designed trade credit programme can become a means for growth. It can improve and unlock access to financing, help mitigate risks before they materialise, and optimise a business’s working capital. Marsh’s Trade Credit Report 2025 discusses the UK’s trade credit landscape in detail.

How can trade credit insurance benefit food and beverage companies?

Trade credit insurance is delivering positive business outcomes across multiple industries in the UK, and the food and beverage sector stands to benefit in the same way. Of the food and beverage companies Marsh surveyed, around 62% already have trade credit insurance, while 26% said they are considering acquiring it.

The advantages of trade credit insurance for professional services companies include:

1. Guaranteeing a stable level of income

The food and beverage sector is highly competitive due to low product differentiation, perishable goods, price-sensitive demand, and market saturation. As a result, profit margins are often tight.

In this context, bad debts and non-payments can severely impact a company, causing cash flow strain, limiting the ability to absorb losses, restricting reinvestment in the business, and increasing financing costs. Trade credit insurance helps protect receivables, promoting stable earnings, and supporting the preservation of even narrow profit margins.

2. Covering debt collection costs

Many food and beverage companies rely on debt collection services to swiftly recover overdue payments, which may involve negotiating repayment plans and escalating legal action.

These services help maintain cash flow and financial stability while promoting compliance with relevant laws and regulations, but they can be costly. According to Marsh’s survey, 56% of food and beverage companies spend between £300,000 and £349,000 annually on outsourced debt collection, and nearly all finance directors report that these costs are increasing.

Trade credit insurance policies typically include debt collection support, which can reduce these expenses. Options include:

  • In-house collection teams that accelerate the debt collection process and improve efficiency.
  • Endorsed collection facilities, appointed by insurers without in-house collection teams, which often offer discounted collection services to policyholders.

3. Enabling growth

In our survey, nearly all food and beverage companies reported increased difficulty in growing their business over the past 12 months, with 40% identifying ineffective business processes as a significant barrier to growth. Common challenges highlighted included poor credit risk management, cash flow management, and sales operations.

Trade credit insurance helps overcome these hurdles by enabling faster credit decisions through access to real-time data. A typical trade credit insurance policy provides key data such as buyers' credit risk assessments, approved credit limits, and policy coverage details, including insured amounts and covered risks. It also offers claims updates, debt collection status, market and industry insights, payment and default histories, and regular reports summarising exposures, claims, and risk management advice.

With this support, food and beverage companies can confidently extend credit to new or higher-risk customers, expanding their market reach. By offering favourable credit terms backed by insurance, companies can improve their competitive position and attract more customers. They are also better able to facilitate strategic partnerships with larger distributors or retailers who require credit terms, knowing their receivables are protected.

Why now is a good time to review your trade credit insurance

The current market environment presents an ideal time to review your trade credit insurance. Higher insurance capacity has resulted in some of the most competitive pricing seen in recent years. Additionally, the insurance industry is developing policies tailored to the unique needs of larger organisations, which is particularly relevant for food and beverage companies.

Please get in touch with your Marsh advisor for more information on insuring your firm against non-payment risk.

Trade Credit Report 2025

Learn how other businesses are navigating challenges and positioning themselves for future success in the UK.

Download the Report

Our people

Kelvyn Sampson

Kelvyn Sampson

Retail, Food & Beverage, and Leisure Industries Leader

  • United Kingdom

Ben Muth

Ben Muth

Business Development Specialist

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