Accounts Receivable Insurance

Definition

• Insurance bought to protect a business's revenue stream from losses arising from non-payment of undisputed invoices due to a customer's insolvency, non-payment of undisputed invoices due to a customer's unwillingness to pay, political risks such as currency inconvertibility or transfer risk, or an inability to collect receivables due to loss of the underlying records (after a fire, for instance). Accounts receivable insurance is especially useful for new, rapidly growing, or small businesses that are unable to do credit checks on all of their clients.

Synonyms
cash-flow coverage, revenue stream insurance, working capital

Related Terms and Acronyms

• Business Insurance — Definition,
  • An umbrella term for insurance that covers various losses that may arise due to the operation of a business.
• Consequential Loss — Definition,
  • The financial loss that occurs due to an entity's inability to use an asset or property.