Protect Your Business Insurance Using Accounts Receivable Factoring
Posted On June 15, 2019
Casualty insurance insures against loss or damage to your business. This type of insurance is often packaged along with property insurance. Property insurance will protect you against harm to the location of your business and its contents. Like furniture or computers and equipment.
It can also guarantee the property of others in your control when the loss occurs and can be for a specific risk. This is somewhat like a fire insurance policy that protects only against a fire loss at that location. Next is liability insurance which will guarantee your company against the legal liability imposed against your business in the case of negligence of employees or the market, and it protects you against any judgments that might be incurred in potential lawsuits.
Then there is commercial auto insurance, covering the vehicles most often used by your business and the property damage to those vehicles or damage caused by them. Here is the one you may not know — business interruption insurance, which insures against loss or damage to the cash flow and profit of your company. Here’s how it works: if equipment or property is damaged, disrupting your regular f business, this type of insurance provides income during the interim period.
Last, we have all probably heard about workers’ comp insurance, which ensures your employees against on-the-job injuries. Requirements vary state to state, but employers must pay into the state system. Now you need to determine which type of insurance is right for your business, and making timely payments on your policies are always going to be crucial. Why? Because defaulted payments result in cancelled policies.
This means your business is exposed to potential loss. But some months making these payments can be burdensome. If you find yourself short on cash with insurance payments due, consider factoring receivables and your open invoices for an immediate influx of money.
Accounts receivable factoring is a practice wherein a business sells its accounts receivable invoices to a third party at a discount in exchange for quick cash with which to finance continued business.
It is a method used by companies to cover short-term cash needs during periods in which these needs exceed cash flow. Factoring services is not a bank loan; it’s not the business’ credit that’s up for inspection but rather the debtor’s (i.e., the party named on the invoice) and there’s nothing to repay.
Once widespread in early merchant banking activities, invoice factoring is experiencing a resurgence in popularity as many small businesses struggle with economic recovery today.