What is the primary function of Accounts Receivable Insurance?

The primary function of Accounts Receivable Insurance is to reconstruct lost financial records. This type of insurance specifically protects businesses from the financial implications associated with the loss of accounts receivable due to various risks, such as theft, fraud, or natural disasters.

When a business experiences a loss of accounts receivable, it can significantly hinder cash flow, as the business may be unable to collect payments owed by customers. Accounts Receivable Insurance helps in this situation by covering the income a business would have received from those customers, ensuring that the business can maintain its operations and continue functioning despite the loss.

Additionally, insurance under this category may assist in addressing the administrative burdens involved in proving the existence and amounts of the lost receivables, thus facilitating the reconstruction of financial records and helping the business recover more quickly.