Accounts Receivable Protection Plan


The Accounts Receivable Protection Plan(ARPP) is an innovative solution recently created by Ryan Insurance Services in collaboration with CIT, the largest factor in North America. AgileOne is excited to be sponsoring this first of its kind program, which will allow their valued staffing company suppliers to fully protect their MSP accounts receivable.

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Cost Example


Economic Outlook


A Top 20 law firm in the US with over 1500 lawyers is offering prepackaged bankruptcies to clients as a strategy.

Insolvency forecast 2021

  • Insolvencies in the US predicted to be up 57% next year.
  • Insolvencies of companies over $50m have doubled since 2019.
  • Corporate bond defaults are at their highest level and expected to continue.
  • A number of companies that can’t service their debt or pay interest-only are nearing an all-time high.
  • Bankruptcy law changes are creating greater use as a legal strategy.
– Euler Hermes, 2020

Insolvency forecast 2021

  • Insolvencies in the US predicted to be up 57% next year.
  • Insolvencies of companies over $50m have doubled since 2019.
  • Corporate bond defaults are at their highest level and expected to continue.
  • A number of companies that can’t service their debt or pay interest-only are nearing an all-time high.
  • Bankruptcy law changes are creating greater use as a legal strategy.

– Euler Hermes, 2020

 

Insolvency forecast 2021

  • Insolvencies in the US predicted to be up 57% next year.
  • Insolvencies of companies over $50m have doubled since 2019.
  • Corporate bond defaults are at their highest level and expected to continue.
  • A number of companies that can’t service their debt or pay interest-only are nearing an all-time high.
  • Bankruptcy law changes are creating greater use as a legal strategy.

– Euler Hermes, 2020

 

FAQ’s


What is the Accounts Receivable Protection Plan (ARPP)?

ARPP is the risk management program that was created by Ryan Insurance Services (RIS) and is offered by a Managed Service Provider (MSP), in order to protect their staffing company suppliers’ accounts receivable (AR) generated from working with their clients. In the unforeseen event of a client organization’s bankruptcy, this protection would trigger at that point in time for participating suppliers.

What financial institution is standing behind ARPP?

CIT, as the largest bank-owned factor in the country, is ultimately providing the protection being offered in this program. MSPs act in the capacity as the program’s sponsor and administrator.

Why would a staffing company supplier want to participate in ARPP?

ARPP was developed to specifically meet the needs of the unique payment structure inherent with the MSP business model. Under this business model and contractual arrangement, there is no current way for a staffing company supplier to protect its receivables by working directly with a financial institution or trade credit insurer to obtain protection in the event of an end-user client bankruptcy.

What other benefits would a supplier derive from participating in ARPP?

An owner of a staffing company will have complete peace of mind that their AR will be collected in a client bankruptcy, so they can continue to confidently grow their business. By protecting their AR in this manner, the staffing company can also potentially negotiate more favorable terms with their current lender on a business line of credit or loan.

What is the amount of protection available under ARPP?

Your MSP will provide you with a listing of specific covered clients that your company is servicing and the limits of AR protection available for each of those clients, pre-underwritten based upon historic invoicing levels. Even though individual limits will be provided for each client, participation is based on the combined total of all clients being served.

What are the cost factors involved to participate in ARPP?

The cost for protection is paid by suppliers opting into the program. The cost is based on several factors, including: the pre-authorized combined AR protection limits set by CIT, the various collection terms per covered clients, the actual weekly invoices generated, the rate charged for the protection, and the actual percentage of the combined total chosen to be covered by the supplier.

See sample cost calculation below.

How does the participating ARPP supplier pay for this protection?

After opting into ARPP, the supplier’s cost of program participation is paid for weekly through automatic deductions from the MSP’s recurring supplier payments.

How do I find out more details to consider participation in ARPP?

See below to schedule a phone consultation or an MS Teams meeting with one of the RIS specialists, about how to enroll in the program.

How can I protect the AR of my non-MSP staffing business?

For your non-MSP business, we suggest you consider getting a quote from one of the large trade credit insurance companies. RIS is prepared to assist you in that area. See below to schedule a phone call or an MS Teams meeting with one of our specialists.

How does the cost of ARPP compare to that of a typical vendor finance program?

Assuming your company is primarily interested in the payment of MSP accounts receivable in the event of a client bankruptcy, the cost of ARPP should be more competitive than most vendor finance programs.

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