CFOs’ Guide

Accounts Receivable Insurance is an insurance product that does more than mitigate risk. It is a strategic tool used by CFOs of companies of all sizes to help grow the business and support their role in the execution of corporate strategy.

Key Benefits of Accounts Receivable Insurance

  • Pays for itself without having to file a claim.
  • Is a key way to safely grow sales.
    • CFOs look to grow sales to customers in countries where they want to exceed their internal credit limit, or to customers where they have large exposures/concentration concerns, and in both cases want to transfer the additional risk from their balance sheet to the insurance companies balance sheet.
    • CFOs see Accounts Receivable Insurance as an investment to improve financing levels and as a risk mitigation strategy, to help their company be in sync to support cash flow.
  • CFOs use Accounts Receivable Insurance to complete the sales cycle with travel/accident cover for their sales people, property insurance to cover their buildings, workers comp insurance to cover their employees and marine/cargo to ship products to their customers. The last part of the sales cycle uses Accounts Receivable Insurance as a second source of repayment if the customer does not pay.
  • CFOs can benefit from Accounts Receivable Insurance in the event of unforeseen geopolitical issues that arise.
  • CFOs have a better opportunity to get a higher advance rate on their Asset Based Loans than those who self-insure. Various Asset Based Loan officers have said in certain circumstances they will raise the advance rates by 5% to 10% which means more liquidity for your client.
  • CFOs use Accounts Receivable Insurance to maintain or reduce their Allowance for Bad Expense. Having a policy in place can provide your clients’ auditors to be comfortable that the Bad Debt Reserve can be capped at the policies deductible, while sales and accounts receivable balances increase year after year.