Insuring your Accounts ReceivableAccounts receivable insurance – sometimes called A/R insurance or trade credit insurance provides companies with protection against customers that fail to pay what they owe.
Well known and widely used by European companies for decades, accounts receivable insurance is now becoming more commonplace among companies of varying sizes based in North America as well.The reason for this growth is that, on average, 40% of a company’s assets are in the form of trade debts. As a result, there is a greater chance that a business will experience a loss within its accounts receivable than any other asset. Accounts receivables are a critical component of the balance sheet — they directly affect the cash flow and profitability. Many companies in the U.S. are thorough when it comes to protecting against losses related to property damage, liability, and other unpredictable, high-exposure risks. However, these same organizations often fail to view accounts receivable as one of the most valuable assets that can and should be secured – leaving themselves exposed to cash flow and revenue problems. There is a safer way to do business. Once implemented, accounts receivable (A/R) insurance coverage can help credit risk teams and other stakeholders manage the commercial and political risks that are beyond the organization’s control. Apart from insuring your invoicing this insurance helps you to monitor the financial health of your clients from time to time and gives your red flags in case clients are filing for bankruptcy. Organization can focus more on getting the business without worrying about their pending invoices in the market. Please contact AIS team for more information on Accounts Receivable Insurance.