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10 Misconceptions about Credit Risk Insurance
By Matt Brocks, Credit Insurance Specialty Broker
Every day your largest asset goes out the door. Accounts receivable, which typically represent more than 40% of a company's assets, arc not only your largest asset, but also the most vulnerable to unexpected loss and business cycles. There is an inherent risk associated with extending credit to your customers and trusting them to pay you for goods or services. In reality, you may have thousands, maybe even millions of dollars in receivables outstanding at anyone time without something to protect your company in the event you're unable to collect. While there is a relatively clear-cut answer to this all-too-common problem, credit insurance (accounts receivable insurance) has relatively modest market penetration among United States businesses, despite being a well-established product in the global insurance market. While this product enjoys more than 70% market penetration in Europe, there are many misconceptions that keep this valuable and useful product sidelined in North America. To convey a better understanding of this useful product and its benefits, presented here are answers to the top misconceptions about credit insurance:
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