By Ron Doyle

Many smaller companies do not have the capital to support their accounts receivable exposure, nor do they have sophisticated credit systems and dedicated staff. The lack of capital to support the accounts receivable creates a greater need for bank support and more comprehensive coverage.

Companies often cite two reasons why they can’t absorb major bad debt losses. Firstly, bad debt write-offs can quickly erode the net worth of a business. And, the second reason: cash flow is critical to a business and bad debts can impair cash flow directly or indirectly by reducing a company’s ability to get financing for their receivables through the bank.

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