Companies use credit insurance to protect their domestic and foreign accounts receivable against bad debt losses. Within the consumer goods manufacturing space, many companies want to have their 12 month policies start during the second quarter -- the time when they begin receiving their holiday purchase orders from big box retail customers.
Schultz said, "The dilemma that these manufacturers have is offering 60, 90, or 120 day terms to retailers that give them open receivable exposures in the first quarter of the following year. Though many retailers are financially strong, some are reporting losses quarter after quarter."
Most retailers generate a large percentage of their sales during the fourth quarter. Those that do not hit their holiday season forecast may file for bankruptcy protection to allow for a restructuring or liquidation. Unfortunately for mid-market consumer goods manufacturers, that means facing a significant credit loss and a negative impact on their own future, unless they have secured credit insurance on their accounts receivable.
One Source has helped secure accounts receivable credit insurance and risk mitigation products for several consumer goods manufacturers in the Midwest to protect their profits against bad debt losses due to potential BK filings in the first quarter of 2015.
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