Canadian manufacturers are operating in a highly unpredictable global trade environment heavily influenced by political and economic decisions beyond their control. Shifts in government policy, changing tariff structures and stalled economic growth are introducing new pressures across supply chains.

One of the immediate effects is visible in the consistency of cash flow from customers. Businesses that appear stable may be quietly facing financial strain resulting from external factors, leading to slower payments or missed obligations. At the same time, many manufacturers carry substantial accounts receivable balances and lengthy payment terms. These balances are often concentrated among a relatively small group of key buyers, increasing exposure at a time when future market conditions are harder to gauge.

With more than 20 years of experience advising manufacturing clients across Canada, Acera Insurance’s Rob Shearar examines how global trends are influencing accounts receivable – and how trade credit insurance can help businesses manage this uncertainty.

How geopolitical instability is influencing payment patterns in manufacturing

In 2026, manufacturers in Canada face ongoing market volatility while remaining highly exposed to international and cross-border supply chains. The impact is heightened for those with relationships deeply embedded in the United States. These partnerships are being challenged by:

• Fluctuating signals from U.S. policymakers
• Evolving tariff and trade terms
• A growing focus on protectionist measures and bilateral trade approaches
• Softening investment and declining buyer confidence

Taken together, these dynamics complicate planning, capital access and liquidity management for customers – even when demand remains steady.

The consequences of these circumstances for manufacturers can present as late payments, prolonged collection periods or reduced liquidity among buyers.

Traditional credit checks can fall short in the current climate

Many manufacturers continue to depend on past payment history, financial statements or established business relationships to assess a customer’s financial health. While this approach can be reliable during stable conditions, it may fail to reflect changes happening during volatile periods.

Customers may appear financially sound despite:

• Having difficulties collecting payment from their own customer base
• Losing financing
• Undergoing restructuring and mergers or exiting markets
• Abrupt declines in demand within the sector
• Rising costs or delays due to supply chain disruption

These ripple effects – often driven by broader geopolitical and economic factors – are harder to detect through conventional credit assessments. As a result, issues may only become visible once payments are already affected.

Receivables often represent a significant, unmanaged exposure

For many manufacturers, accounts receivable is one of the largest assets on the balance sheet. Standard payment terms can range from 30 to 120 days, and primary revenue streams may rely on a few key customers.

This creates several layers of vulnerability:

• A single unpaid invoice can eliminate months of profit.
• Internal credit controls may struggle to respond as exposure increases with growth.
• Financial reporting only captures a retrospective view rather than real-time realities.

For example, a business operating at a 5% net margin would need approximately $10 million in additional revenue to offset a $500,000 bad debt.

Using trade credit insurance to withstand cash flow fluctuations

In response to increasing uncertainty, many manufacturers are re-evaluating how they manage receivables and limit fluctuations in cash flow.

Trade credit insurance (accounts receivable insurance) helps businesses mitigate losses from customer non-payment due to insolvency, bankruptcy or protracted default. It serves as a practical tool to protect your balance sheet from unexpected financial disruption.

Making receivables into a more controlled asset

Once goods are in production or delivered, receivables exposure is difficult to minimize. Trade credit insurance helps shift a portion of that risk away from the business, converting receivables into a more structured and manageable asset. This can lessen the impact of unexpected defaults and support steadier cash flow.

Preserving margins and earnings

In capital-intensive operations, bad debts can quickly erode profitability. Even a single non-payment can significantly affect earnings. By reducing the likelihood that receivables turn into losses, trade credit insurance helps maintain more consistent financial performance, particularly in uncertain markets.

Enabling more confident growth

Expanding into new customers, industries or regions often introduces additional risk. Trade credit insurers continuously assess buyer creditworthiness, offering insights that can support better decision-making:

• Approved coverage can indicate lower perceived risk.
• Reduced limits or exclusions may serve as early warning signals.
• Assessments reflect broader economic and sector trends.

This external validation allows manufacturers to pursue growth opportunities with greater awareness of potential exposure.

Supporting financing and lender relationships

From a lending perspective, insured receivables are typically viewed as more secure. This can improve borrowing conditions by increasing advance rates, easing reserve requirements and strengthening covenant positions – ultimately improving access to working capital.

Reinforcing existing credit practices

Trade credit insurance is most effective when used alongside strong internal processes, such as structured credit policies, proactive receivables monitoring and established escalation protocols. Rather than replacing these controls, it complements them as an additional measure when existing ones are insufficient.

Trade credit insurance helps position manufacturers for resilience

Businesses don’t invest in trade credit insurance with the expectation that customers will fail, but because they recognize that the timing and causes of non-payment are simply out of their control.

In the current climate, these disruptions are becoming more common and less predictable. Given the scale of accounts receivable on the balance sheet, addressing this concern has become a priority for many manufacturers. Trade credit insurance can play an important role in stabilizing cash flow, protecting earnings and helping businesses remain adaptable in an evolving landscape.

About the Contributor

Connect with an Acera Insurance advisor to explore how trade credit insurance can strengthen your financial resilience.

Rob Shearar is Director, Independent Business Unit at Acera Insurance. He brings more than 20 years of insurance and risk management experience and specialized expertise in manufacturing, wholesale and distribution, construction and commercial real estate. Rob is the practice leader for our manufacturing specialty nationwide and an advisory board member for Canadian Manufacturers & Exporters. Connect with Rob at 604.484.0208 or [email protected].

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