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
revenue stream insurance, cash-flow coverage, 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.