Private equity (PE) firms are always looking for an edge when acquiring and scaling promising businesses. While most pre acquisition discussions focus on risks tied to property, supply chain and inventory, one critical area often receives less attention: the trade receivables that underpin cash flow.
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Trade credit insurance directly addresses this vulnerability. By safeguarding portfolio companies against bad debt, it supports top‑line growth, improves financial stability and unlocks financing options.

You can think of it this way: When a business sells goods or services on credit, its receivables represent both opportunity and risk. Introducing trade credit insurance protects against unpaid invoices, payment defaults and insolvencies, dramatically reducing the likelihood of write‑offs.

The result? Stronger balance sheets, improved resilience and higher valuations at exit.

The most effective strategy is to consider risk‑transfer solutions both before and after investment, with a focus on supporting growth while protecting the balance sheet.

“
For private equity investors, maximising growth is essential — but not at the expense of unexpected credit losses. Credit insurance provides the visibility and protection needed to scale with confidence.
Colin Cunningham, national sales leader, Trade Credit, Gallagher

Why accounts receivable insurance really matters

By protecting against payment defaults, trade credit insurance helps PE and venture capital firms validate revenue quality and negotiate deals with greater confidence. It enables portfolio companies to anticipate credit risks, optimise liquidity and reinvest working capital into growth. Key benefits include:

  • Greater investor confidence: Shareholder investments are better protected as exposure to unexpected losses from late payments or defaults is reduced.
  • Enhanced capital efficiency: Credit insurance reduces the need for bad debt reserves and frees up capital that can be reinvested to drive higher returns.
  • Post‑merger integration: It helps create a smoother transition by protecting the acquired company's receivables from day one. This reduces the risk of cash‑flow disruption during integration and continues to provide ongoing protection against credit risk, supporting long‑term financial stability.
  • Higher top-line growth: With risk transferred, companies can offer more competitive credit terms, overcome credit restrictions and grow sales with confidence.
  • Portfolio diversification: By mitigating payment risk, firms can explore new markets, sectors and customer segments that may have previously been deemed too risky.
  • Actionable intelligence: Gallagher works with you to carry out deep analysis of customer creditworthiness, financial stability and payment behaviour. This gives clear visibility into the strength and reliability of the client book.
  • Improved lending prospects: With insured receivables, companies can often unlock greater working capital capacity, ease restrictive credit arrangements and improve overall financial flexibility.

Gain a competitive advantage

Trade credit insurance plays a crucial role in de‑risking investments and strengthening financial resilience. Considering it early in the investment process helps transfer risk off the balance sheet, preserve liquidity and secure more favourable financing terms.

For PE firms, the benefits go far beyond protection. With better data and deeper customer insights, you can anticipate defaults, optimise working capital and accelerate growth; all of which contribute to higher valuations and more competitive positioning.

To learn more about how trade credit insurance can support your investment strategy, please contact your local Gallagher specialist.

Disclaimer

The sole purpose of this article is to provide guidance on the issues covered. This article is not intended to give legal advice, and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and/or market practice in this area. We make no claims as to the completeness or accuracy of the information contained herein or in the links which were live at the date of publication. You should not act upon (or should refrain from acting upon) information in this publication without first seeking specific legal and/or specialist advice. Arthur J. Gallagher Insurance Brokers Limited accepts no liability for any inaccuracy, omission or mistake in this publication, nor will we be responsible for any loss which may be suffered as a result of any person relying on the information contained herein.

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