Not All Customers Are Equal:
Manage Exposure with Targeted Risk Management
Some customers offer more exposure than others. AR credit put options extend your flexibility when facing targeted risks.
An AR put option is a contractual obligation between a vendor and the put seller. If a vendor’s customer files for bankruptcy, the vendor has the option to assign (“put”) the qualifying receivables to the put seller at face value. The put seller has a senior obligation to buy the qualifying receivables at face value.
AR credit puts are not exchange-traded puts. They are offered by a select set of global financial service firms. Professionals use them to effectively protect select, high-risk, or concentrated exposures and to expand credit limits because they provide:
- Non-cancelable protection
- Flexible tenors from six months to five years
- Up to 100 percent protection with no coinsurance or deductibles
- No change to payment process or notice to customer
- No reporting requirements
- Less conditional documentation than other forms of protection
FGI Risk can help you determine whether AR credit put options are right for you.
To learn more about how credit puts and swaps can help you business, click here ❯