Not All Customers Are Equal:
Manage Exposure through Targeted Risk Management
Some customers offer more exposure than others. AR credit put options are a great way to increase your flexibility when facing targeted risks.
An AR put option is a contractual obligation between a vendor and the put seller. Therefore, 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 protect select, high-risk, or concentrated exposures effectively 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 changes to payment processes or notices to the customer
- No reporting requirements
- Less conditional documentation than other forms of protection
To schedule a call and discuss how FGI Risk can help you determine whether AR credit put options are right for your business, click here ❯