Credit Insurance versus Bad Debt Protection

Reduce Cash Flow Struggles with Non-Recourse (Bad Debtor Protection) Factoring

Bad Debt Protection versus Credit Insurance Summary

Bad debt refers to the number of unpaid accounts receivable (A/R) that a creditor must write off or take a loss for customer non-payment. Credit insurance provides coverage for a bad debt-related loss. And bad debt protection is a form of accounts receivable coverage from account debtor or customer bankruptcy, insolvency, and protracted slow pay.

When companies extend credit terms, there is always a chance of bad debt-related charge-offs. So Non-recourse factoring through bad debt protection offers trade insurance benefits without taking on your own policy.

Reduce Cash Flow Struggles with Non-Recourse (Bad Debtor Protection) Factoring

Your small staffing agency continuously runs into cash flow issues from weekly payroll funding demands. But never knowing which employees will be paid on time carries a lot of risk and liability for your staffing firm. So, reduce your cash flow issues with non-recourse factoring – sell your unpaid receivables and receive accounts receivable protection if your customer does not pay. Bankers Factoring includes our A/R insurance as part of our non-recourse factoring service for no extra charge.

Here is an article about help for Common Cash Flow Issues.

Bankers Factoring is your Bad Debt Specialist that can develop a bad debt protection program just for your company. Moreover, you can receive cash flow funding, bad debt coverage, and protection from customer default. Factoring receivables without recourse insulates your business from losses, injects payroll funding, and helps cash flow. Keep reading Factoring Company: What it is and Your Best Choice.

In this bad debt protection article, we cover the following:

• What is bad debt protection?
• What is the difference between credit insurance and debt protection?
• Do I need bad debt insurance?
• How to manage your bad debt?
• Accounts Receivable Insurance Through Non-Recourse Factoring Company
• Why pick non-recourse factoring over recourse factoring company?
• Best Non-Recourse Factor Company  

What is bad debt protection?

Bad debt protection mitigates the risk of your company extending credit terms to customers in the event of default. With non-recourse factoring companies, like Bankers Factoring, we absorb the losses rather than your company. And A/R (bad debt) protection provides a piece of mind if your customer goes out of business or cannot pay its bills.

With our trade credit experience, strong balance sheet, and utilizing our own credit insurance, we make it easier to factor unpaid invoices. No hassle or worries about adding another insurance policy to your books.

Keep reading our full article Bad Debt Protection with Accounts Receivable Factoring.

What is the difference between credit insurance and bad debt protection?

Bad debt protection is like credit insurance without the hassle of a policy. A/R protection also provides extended coverage from liabilities extending outside of insolvency. Factoring receivables without recourse covers your receivables, but each factoring company’s terms and conditions vary.

Bad debts stem from three leading causes:

1. Bankruptcy
2. Insolvency
3. Protracted short pay

Non-recourse factoring companies can typically buy bad debt insurance policies for a lower premium than startups and small businesses. Additionally, non-recourse factoring helps your company save time and money when the potential bad debt arises with our Total A/R Management Solution. Plus, selling your unpaid receivables provides the bonus of managing your receivables and credit department.

So contact Bankers Factoring and learn more about our bad debt (A/R) protection vs. credit insurance: covering your company from unexpected losses and cash flows gaps.

Do I need bad debt insurance?

If your business extends credit terms to your customers, protection from uncollected receivables is essential. Without our trade credit experience, your business would be exposed to:

1. Unpaid invoices
2. Unexpected losses such as natural disasters and pandemics
3. The external risk from political, social, or geographic issues
4. Losses from long operating cycles with an upfront cash investment

Keep reading our full article, How to Offer Credit Terms through Non-recourse AR Financing.

How to manage your bad debt?

Recourse factoring companies provide outsourced credit departments that manage your uncollected accounts receivables. Some of the common ways to manage uncollected A/R invoices include:

1. Conducting customer credit inquiries and risk assessment
2. Setting credit term limits for debtors with extended lines
3. Setting standards to qualify for credit terms or require prepayment
4. Standard reporting intervals of invoices and statements
5. 24/7 online reporting and enhanced technology

Ready for the owner-employees of Bankers Factoring to help you grow your business through funding with bad debt protection? Use our fast online factoring application or call the toll-free number 866-598-4295

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