As a new business person you may not have realized that there even was such a thing as accounts receivable insurance for Canadians. In fact, there are many different types of business insurance that many business owners are not aware of. One resource for this type of insurance as well as other forms of insurance for those that deal with the US or internationally is EDC.ca
Accounts Receivable insurance isn’t applicable to every business and is actually restricted to those that have accounts receivable from US and international sales. Now this most definitely won’t be for the very small businesses but it is something that should be kept in mind if you are thinking about getting into international business and are concerned about the receivables.
With the internet giving much more opportunity for international sales at least it’s good to know that there is this type of insurance available, which although is an added expense it helps to reduce the risk of unpaid receivables.
There is quite a bit of flexibility with this type of insurance in some cases. You can choose to cover all of your US and international sales or just some of them. Perhaps you have just one large contract that you are worried about contract cancellation, or other issues like permit cancellation or payment delays. Then in this case you can take a look at contract frustration insurance. This type of insurance is beneficial for those businesses that want to venture into the foreign markets bought are a little nervous about doing so and basing a lot of financial decisions on one large contract where many things could go wrong.
The coverage provided by this type of insurance is quite extensive that can cover many of the mishaps that can come with a large contract deal. However there is criteria that has to be met in order to qualify in regards to the price a lot of factors are taken into consideration the liability and risk would certainly be considered as well as the length of the policy and what the payment terms were for the contract.
Another form of insurance is called performance security insurance. In this case what happens is the potential buyer that you have will ask for some type of guarantee that you are going to be able to meet the requirements of the contract. In many cases the client may demand a bank issued guarantee this can be risky as unforeseen circumstances can arise that may prevent you from fulfilling your performance duties. Knowing that you can ensure this type of business dealing gives you much more confidence when adventuring into the international business market.
