Offers business protection or 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 write a specific credit risk. You, the seller, usually pay upfront for a Receivalbe Puts 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 wise to buy Receivable Puts from respected financial institutions and with the help of an attorney that specializes in financial transactions.
An Accounts Receivable Put Option are mostly used to mitigate non-payment risk on specific accounts. They are often used for higher risk accounts where traditional risk mitigates are not, and provide a guaranteed amount for the contract period vs variable amounts. Puts typically cover 100% of the receivable and the contracts are non-cancelable.
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