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Accounts receivable insurance protects a company against financial losses caused by damage to its accounts receivable (AR) records. This type of coverage is important because the loss of accounts receivable records may render a firm unable to collect money customers owe.How do insurance companies calculate average monthly accounts receivable?
First, an insurer calculates total accounts receivable for the twelve months prior to the loss. Next, it divides this sum by twelve, which gives an average monthly receivable. For example, suppose a firm's accounts receivable records are destroyed in a fire on January 1, 2017.Can accounts receivable insurance help you borrow more money?
When your domestic and international receivables are covered by an accounts receivable insurance policy, you may be able to borrow more — often at more favorable rates. “Accounts receivable insurance has allowed us to take on customers and transactions we wouldn’t have felt comfortable taking on by ourselves.”Are accounts receivable risks holding your business back?
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. Are A/R risks holding your business back?