How can someone best protect accounts receivable?

Another valuable business asset can be its accounts receivable. This is true for physicians and other professionals and service providers who may have few tangible assets but considerable receivables. Of course, you can encumber accounts receivable with liens in the same way you can encumber any other asset. For lawsuit protection you can also factor or sell the receivables to a factoring company for fast cash, which is always more easily protected. Factoring companies buy receivables owed by business customers with acceptable credit for a modest discount. Factoring companies specialize. Some buy receivables due to physicians and other professionals, but there are factors for every type business. Your objective is to find your best deal when you want fast cash and less exposed receivables. It’s also possible to use receivables to secure insurance premium financing. Essentially, you encumber the receivables and use the premiums to buy life insurance, which is ordinarily creditor exempt. This, however, should be reviewed with your professional financial advisor to determine that it makes economic sense.

You can also establish your own accounts receivable billing and collection firm where only the net proceeds after all billing and collection costs would be remitted to the debtor company. The larger share may remain with the billing and collection company as earned fees. You can see that we have many legitimate ways to encumber any size or type business.