- Commercial Inland Marine Insurance
Business Insurance Basics: Account
Receivables Insurance
Accounts receivable insurance (also known as credit or trade credit insurance) is newer a type of insurance that covers you against any losses you suffer because a customer refuses to pay, or if you are unable to collect payment from a customer for a variety of reasons.
These policies also help reduce your risk in an uncertain economy, and limit risks associated with sales growth in new and emerging markets in the United States and abroad.
In recent years, trade credit insurance has grown substantially in the United States, while other methods of credit assurance, such as letters of credit, have declined.
“Accounts receivable insurance is a real safety net for small and growing companies,” says Brad Bengston, Commercial Sales Agent for Nationwide Insurance. “You could have a great deal of your assets tied up with another company. If that company can’t make payment because of bankruptcy or other events, your company could end up wounded.”
Situations that benefit from credit insurance include:
- Your accounts receivable records have become damaged or destroyed, making it virtually impossible to collect payment from customers
- A customer’s refusal to accept the goods
- A customer goes bankrupt or becomes insolvent, and is unable to pay
- Unforeseen cancellation of permits pertaining to imports or exports
- Cancellation of a contract
- War, strike or revolution
What are the benefits of accounts receivables insurance?
It makes good business sense to invest in accounts receivable insurance. Here’s why:
- Protect your main asset – your accounts receivable dollars
- Increase your cash flow
- Reduce bad debts and improve your balance sheet
- Leverage the policy to obtain more cash and free up other assets
- Offer your customers better credit terms and payment options
- Obtain larger orders
- Expand into new and emerging markets with assurance
- Turn your losses into cash
Contact a Nationwide insurance advisor today and find out how accounts receivables insurance can provide you with peace of mind and help you grow your business.
