Offers business protection on each invoice amount, in the event that your customer declares bankruptcy.
Receivable Puts are used when primary and excess trade credit insurers are unwilling to insure a specific credit risk. You, the seller, usually pay upfront for a Receivable Put contract.
Accounts Receivable Puts are financial instruments and you need to pay close attention to the counterparty risk, as well as the contract language, i.e., you want them to be around and able to pay you, if necessary.
It is prudent to buy Receivable Puts from respected financial institutions and with the help of an attorney that specializes in financial transactions.
An Accounts Receivable Put may mitigate non-payment risk on specific accounts and are often used for higher risk accounts where traditional credit insurance is not available. Puts provide a guaranteed amount for the contract period vs a variable amount. Puts typically cover 100% of the receivable and contracts are non-cancelable.
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