Canadian Financial, Real Estate and Mortgage Glossary

How often this word is used
50% - Moderately

Accounts Receivable Insurance

Synonyms:cash-flow coverage, revenue stream insurance, working capital
Filed Under: insurance
Tags: business, insurance

Definition of accounts receivable insurance

accounts receivable insurance
1. 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.

Related Terms and Acronyms:

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

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