Bad debt protection insures your ledger in the event of a customer’s insolvency or protracted non payment. As a business you protect your assets; offices, plant and machinery, computers, or company vehicles. However, your biggest asset, your debtor book, is unprotected.
Not all finance companies provide bad debt protection in the same way therefore it is important that an insurance product is best suited to your needs
There are three main types of bad debt protection products. As to which one is the most suitable will depend on factors such as turnover and quality of your customers
Stand Alone.
Bad Debt Protection is a way of insuring your ledger against insolvency. Traditionally this is bolted on to a factoring or invoice finance facility however a standalone facility provided by a specialist insurance provider can be cheaper and provide superior cover. Clients can also choose which debtors they want to insure, and only pay the cost of insurance as and when they fund invoices against that debtor. Insurance can be provided for international trade as well as domestic
Non-Recourse Factoring
Non Recourse factoring provides businesses with a cash flow finance solution along with the added value of bad debt protection. Factoring provides an immediate injection of cash into the business and will provide a source of funding that will grow with your business. Bad debt protection provides peace of mind that you will get paid in the event of a customers’ insolvency / inability to pay. Factoring also can save valuable management time by chasing and collecting outstanding invoices on your behalf.
Non-Recourse Invoice Finance
Similar to other invoice discounting solutions, non-recourse invoice discounting releases cash against your invoices within 24 hours of issue, giving you access to working capital required for day-to-day activities and business expansion.
What makes non-recourse invoice discounting different from other invoice discounting solutions is that the invoice finance company additionally provides bad debt protection to safeguard your business against the risk of insolvency, and even in instances late payment of debts.
For a free without obligation quote, contact XL Business Finance today.
