Credit Insurance

[ICS]

Hi,

Is it possible to insure against bad debt. I have to pay my suppliers on 30 days and therefore I offer 14 days to my customers. However a couple of potential new customers are insisting on 30 days plus they are larger customers and therefore I am worried that if they do not pay my invoices I could be left with a significant debt on my hands

Is there any way to protect my business from this risk?

Any help would be much appreciated, I have done a search but could not find this info (I am new only my 2nd post so still getting used to the site)

Best Regards,

ICS

 

[DaveSUK]

Hi, one of my companies regularly insures debt we use HSBC, http://www.hsbc.co.uk/1/2/business/insurance/trade-credit-insurance

 

[KMD]

Hi,

Please drop me a line. I can advise the best course of action but it does sound like non recourse factoring. This will offer 2 things: 1. You will be paid around 85-90% of the value of invoices immediately they are produced (bridging the gap between 14 and 30+ days) and 2. Cover against default and businesses going bust.

Call me or drop me an e-mail and I'll explain and if agreeable put you in touch with a broker who is really helpful.

cheers

Kev

 

[SaraR0112]

Have pm'd you

 

[Geoff T]

ICS - have you credit checked the potential customers? If they're going to be that important to you, you really should check them out properly before agreeing anything...

 

[ICS]

Hi Geoff,

Thanks for your post yes i credit check the companies,however just looking to protect myself fully (I am very Risk Averse which is not the best trait in business to a degree I guess)

I would rather sacrifice some profit in return for peace of mind just wondering the best way to do this. The best I understand so far it that Non Recourse Factoring may be the best way forward.

Does anybody know if my customer may object to using a factoring company?

Best Regards,

ICS

 

[Geoff T]

Wouldn't worry about the customer if I were you, the agreement would be between you and the factoring company...

Have a word with KMD as he offered before, or talk to Ian J - also a broker...

best of luck

 

[KMD]

Hi ICS,

I have just had a conversation with a factoring company. He said to give him a call. Call me 1st and I'll give you his details:

07805-902287

Kev

 

[seanstevens]

Not looking to step on any toes;

To OP; before you commit to anything (factoring or insurance) you need to clearly know if it is just the odd company you are looking for cover on or your total ledger.

If it is total ledger then factoring would probably be a better fit. If it is a one off then out of the solutions mentioned above then insurance may work better.

Remember that with either choice there may be times that they will advise you that they would not accept a certain customer on credit and then you will be on your own to make a decision on dealing with them or not so keep your contracts in place with your credit checking companies etc.

Best of luck with your choice and good luck with your future business.

 

[ICS]

Thanks for your comments Gents, Kev I will give you a call tomorrow on your mobile,

Thanks,

ICS

 

[FactoringProf]

You should also consider using Invoice Discountnig as a way of financing your receivables. It is cheaper than full service factoring however you are obligued to manage your sales ledger alone.

----
Kris

 

[FactoringProf]

Hi ICS,

I have just had a conversation with a factoring company. He said to give him a call. Call me 1st and I'll give you his details:

07805-902287

Kev

You should also consider using Invoice Discountnig as a way of financing your receivables. It is cheaper than full service factoring however you are obligued to manage your sales ledger alone.

----
Kris

 

[Ian J]

Kev I will give you a call tomorrow on your mobile,

I'm intrigued

Kev isn't a broker but he "has had a conversation with a factoring company" and he will tell you who if you contact him directly - presumably so that he doesn't lose out on any commission.

They say that a little knowledge is a dangerous thing and non recourse factoring isn't as straight forward as it would seem with major bank owned factors trying their hardest to wriggle out of paying claims.

If all you want is credit insurance I would suggest that you contact specialist credit insurance brokers. I use Rycroft Associates LLP and if anyone can obtain cover for you they will. Google will turn up their details for you

 

[KMD]

Ian I might not be a broker but does that mean I dont know what I'm talking about - NO

Commission - What commission!!

I worked in the industry and understand very well the negs and posotives of Factoring, Invoice discounting, CI, Non-recourse CI etc, etc.

By all means call me for a chat.....

funny you should mention the exact broker that I have a relationship with!!!

Have a good day

Kev

 

[Simply Business]

If you are looking for a one off deal, factoring or invoice discounting may not be a good idea.

If you are looking for complete outsourcing your debt collection, take factoring.
For bigger companies, invoice discounting can be an option, for smaller and midsized companies, factoring is a better product.

For 1 invoice only, I suggest to take out an insurance, or ask for a prepayment. Especially for a big job for a small company, it's common to do so.

If they refuse, it's worth to ask a credit check company.

We sell factoring services, but before you go all the way, ask yourself if you want to use it for all of your invoices. If the answer is yes, go for factoring.