AR Insurance Market Expands With Allied World Entrance

Nonpayment can lead to implosion for a supplier. Issues of delayed and late payment only heighten those anxieties for a business that they may never get paid.

The measures businesses can take to protect themselves against this situation often come from their financial institution. But last year, a new service arrived for B2B firms that provides another option: accounts receivable insurance.

Waldorf Growth Partners entered the U.S. market last September, claiming to provide the nation’s first AR insurance tool for SMEs.

Now, the industry has a competitor: Allied World.

Reports on Thursday (June 16) said the firm launched its AR insurance tool for U.S. and Canadian businesses. The company provides coverage to CFOs and financial officials to mitigate the risk associated with customer nonpayment, either by default or from a customer going out of business.

“As part of our overall global crisis management vision and strategy, we are very pleased to bring accounts receivable insurance to the U.S. market,” said Allied World’s executive vice president of the global crisis management division, Todd Germano, in a statement.

Its AR insurance solution can now be offered in conjunction with existing offerings, including trade credit coverage, product recall and political risk coverage, reports said.

The demand for AR insurance is on the rise, as payment default continues to threaten the vitality and survival of businesses.

A recent report from U.S. Bank found that up to 82 percent of small businesses fail because of poor cash management, often thanks to a lack of steady payment and cash flow.

In addition to Waldorf Growth Partners launching its tool, Euler Hermes announced earlier this year that it would introduce Simplicity, its own small business AR risk management service.

While it may be a new solution for SMEs in the U.S., accounts receivable insurance has been around for “approximately 100 years,” according to Waldorf CEO David Waldorf in a recent interview with PYMNTS.