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INSURANCE| 03.03.2021

Credit insurance: an essential lever for SME growth 

Marta Villalba

Enrique Cuadra

In this article, Enrique Cuadra, Chief Risk Officer at Solunion—a joint venture between MAPFRE and Euler Hermes—discusses the importance of credit insurance to preserve the financial health of SMEs. Credit insurance proves to be an invaluable tool for management of the economic cycle. Solunion’s research shows that companies working with credit insurance enjoy a growth rate that is much higher than the rate of GDP growth in the country in which they operate, and also show much greater resilience during periods of economic recession.

 Over the past year, as the COVID-19 pandemic has developed into a serious, long-lasting crisis, SMEs have become increasingly conscious of the risk presented by potential defaults or insolvency on the part of their clients. Products such as credit insurance help to minimize these risks.



Small and medium-sized enterprises (SMEs) are key drivers of economic development in Spain and Latin America. They have also been the companies that have suffered the worst direct impact of the pandemic since it began. In some economies, government financial support has helped to soften the impact of the pandemic. However, there are still many obstacles to overcome in order to return to normal operation and recover to pre-crisis levels of activity.

In terms of business risk management, there are many variables that can affect a company’s ability to remain solvent. Risk analysis should not only be conducted in the case of new clients, but also needs to be systematically applied to the entire portfolio. However well we think we know our business partners, none of them is immune to an unexpected crisis, especially against the current backdrop.


Default: a recurring feature of sales on credit

Any business relying on credit inevitably carries risks. By their nature, however, SMEs are traditionally more seriously affected in the event of invoice payment delays or insolvency on the part of their debtors. Coverage for claims and—even more importantly—preventing claims in the first place, are the keys to ensuring the viability of businesses in the face of potential delayed payments or defaults.

A non-payment situation has a direct impact on the balance sheet of SMEs, with a variety of consequences. Depending on variables such as the economic solvency of the company or the unpaid amount, the effects can range from small blips in corporate cash flow to business interruption or even the company’s complete liquidation.

Credit insurance provides a comprehensive business risk protection service that includes risk prevention, debt recovery management, and indemnification in the event that the latter does not occur. Information is an invaluable asset in establishing secure business relationships. Knowledge, both of the markets in which companies operate and of their business partners, determines operational success — even more so in the current context of global crisis and volatility. 

Through constant monitoring of market, sector and business risks, credit insurance guides companies in their business decisions, becoming a partner that accompanies them throughout their sales operations as well as a driver of business growth and expansion.


Added value and a differentiating factor

Constantly innovating to provide increasingly valuable and useful solutions has become an obligation and a permanent challenge for the credit insurance sector, which is constantly adapting to enrich and optimize its offer.

In this sense, a number of key elements provide added value that constitutes a real differentiating factor:

  • Information, derived from knowledge of markets, sectors and clients, and that is constantly updated;
  • Infrastructure, based on a strong local presence, in order to better determine risk proximity;
  • Comprehensive professional service at every stage of insured companies’ sales and collection procedures; and
  • Products that are increasingly customized and tailored to the specific needs of each type of company.

For further information concerning Secure Growth and A Partner for SMEs