The losses on receivables are all the debts that aren't paid from the purchasers of a company. They make the accounting provisions fragile. It's possible to cover the bad debts and minimize the losses on receivables.
The insurance against bad debts is adapted for the small companies or for the independents that have difficulties to receive their payments. It's particularly useful for the companies that require the payment of the benefits by invoicing. It's very interesting for the garage owners or the attorneys for example.
With losses on receivables insurance, it's possible to choose which buyers to cover. The covered buyers are the buyers for which the insurance company pays in case of bad debt. A losses on receivables insurance allows to maintain the accounting provisions of a company.
A company that provides a benefit, for example a garage owner, sends a bill to a client. The client doesn't pay after the delay of 30 days. The garage owner gives the client a new delay of 30 days to pay the debt. After the second deadline, the bill is not paid. The garage owner can again give 30 days to the client to pay or can report this case to the insurance company.
When the case is reported to the insurance company that covers the debt, the insurance company tries to find a solution with the debtor. The garage owner is certain to refund a minimum of 80% of the total debt.
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