Insurance is a compelling and affordable alternative to factoring – the selling of accounts receivable to a third party. Credit insurance can strengthen both cash flow and strategic decision making.
Insuring accounts receivable with credit insurance:
- Keeps your company connected to your customers.
- Creates more predictable cash flow.
- Allows you to conduct business without interference and with approved credit for your customers.
The contrast with factoring could not be greater. When your company sells its accounts receivable to a factor:
- You lose control of your customer relationships.
- The factor that owns accounts receivable manages all credit matters involving those customer relationships.
- You have to go through the factor in order to contact a customer.
- These circumstances could harm customer relationships.
- You may not be able to get payment guarantees on sold accounts receivable.
- Any payment guarantees that are available can double factoring costs.