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Trade credit insurance: Supporting UK manufacturing & supply risks

The UK manufacturing sector is navigating a complex and evolving landscape, marked by ongoing supply chain disruptions, rising raw material costs, and extended production cycles.

10/12/2025 · 3 minute read

Trade credit insurance: Supporting UK manufacturing through supply chain and credit risk challenges

The UK manufacturing sector is navigating a complex and evolving landscape, marked by ongoing supply chain disruptions, rising raw material costs, and extended production cycles. These challenges contribute to production delays, increased expenses, and heightened uncertainty, putting pressure on working capital. In this environment, effective credit risk management is more crucial than ever. Trade credit insurance has become an essential tool — not only protecting manufacturers against bad debts but also supporting growth, strengthening supplier relationships, and enhancing financial stability.

Understanding the credit risk landscape in manufacturing

According to a survey conducted for Marsh’s Trade Credit Report 2025, 80% of manufacturing businesses found it more difficult to grow this year compared to 2024. One of the biggest obstacles to growth is accurately identifying which customers are creditworthy and which should be avoided.

Many finance directors in manufacturing report that their internal credit control processes for onboarding new customers rely heavily on credit rating agencies. However, these agencies typically base their assessments on publicly available data, such as records from Companies House, which may not accurately reflect a customer’s current financial health. For example, accounts that appeared strong in March might no longer be reliable by November, when you are considering doing business with that customer.

The current economic environment has prompted manufacturers to change their approach to credit control. According to our survey, half of the manufacturers who responded now monitor credit ratings more closely. Any oversight can have serious consequences. In a just-in-time (JIT) environment, there is no room for supply chain disruption; such issues could ultimately affect delivery commitments and profitability.

How trade credit insurance benefits manufacturers

One practical and effective way for manufacturers to protect themselves against the risk of non-payment for goods or services sold on credit is to invest in trade credit insurance. While traditionally viewed as a safety net against bad debts, a well-structured trade credit insurance programme offers far more when integrated into a broader risk management strategy. The benefits include:

  1. Protection against non-payment of invoices: Large contracts with extended payment terms expose companies to significant credit risk, where payment delays or defaults by clients, subcontractors, or suppliers can disrupt cash flow and threaten continuity. Trade credit insurance safeguards against this by providing financial compensation for unpaid invoices, helping your business maintain steady cash flow even if a customer fails to pay.
  2. Enhanced access to credit lines: When your suppliers use credit insurance as part of their risk management strategy, they are more confident in extending higher credit limits to your company if you also have trade credit insurance. This increased confidence allows suppliers to offer you larger credit lines with more favourable payment terms, ultimately strengthening your supplier relationships.
  3. Coverage of debt collection costs: Our survey found that 94% of manufacturers outsource their debt collection, with 98% of those reporting that collection costs have increased over the past 12 months. Many companies outsource because debt collection is time-consuming and resource-intensive. As costs rise, collection agencies charge more for their services.

    Fortunately, many credit insurance policies include indemnified collections, meaning the insurer covers up to 90% of amounts recovered through debt collection efforts. Additionally, some credit insurers offer professional debt collection services as part of their package. This not only improves recovery rates but also helps offset collection costs, allowing manufacturers to focus on production and growth rather than chasing overdue payments.
  4. Provides creditworthiness assessments of prospective clients: A key advantage of credit insurance for manufacturers is its ability to drive growth by providing real-time credit intelligence from multiple active policies. This enables insurers to monitor payment behaviours continuously, identifying which customers pay promptly and which do not. Such insights are especially valuable for manufacturers expanding into international markets, where reliable credit information is hard to obtain. Combined with an appropriate credit limit, this intelligence helps you grow faster and with greater confidence.

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

The current market environment presents an ideal opportunity to review your trade credit insurance. Over the past few years, the number of insurers in the market has grown significantly, resulting in higher insurance capacity and competitive pricing. Additionally, the insurance industry is developing policies tailored to the unique needs of larger organisations, which is particularly relevant for manufacturers.

When securing a trade credit insurance policy, it is crucial to approach the entire market rather than dealing directly with a single insurer. Marsh can help you navigate the market to ensure access to the best options available. Whether you are new to credit insurance or looking to optimise an existing policy, Marsh’s extensive market relationships provide invaluable support in securing the best pricing, structure, and credit limits.

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

Our people

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Kasia Lipinska

Marsh UK Industries - Automotive & Manufacturing Industries Leader

Lewis Walkington

Lewis Walkington

Vice President, Chemicals, Manufacturing & Automotive Credit Specialties

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