Credit Risk Mitigation Tools
When extending credit to a new or existing customer, you take on a creditor's role and the accompanying risk of loss. Here's what to do from the start to mitigate your risk.
Personal guarantee of owner(s)
Having the company owner(s) stand behind their debt personally is a significant enhancement and may allow you to be paid before unsecured creditors. |
Standby Letter of Credit
A specific Letter of Credit provided by your customer's bank provides you, as the beneficiary, financial security if your customer fails to pay. BondsPerformance and Financial – Performance bonds come from insurance companies and banks. They are used to ensure work provided by a contractor. Financial bonds are debt securities. The issuer owes the bond recipient money and typically must pay interest. |