What is Bad Debt Protection And Non Recourse?
Bad Debt Protection also known as Non Recourse provides your business with: Protection Against Non Payment by customers due to insolvency or protracted default (terms vary between providers).
It is an alternative to taking out a credit insurance policy, which can be more costly.
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How Does Bad Debt Protection Work?
Bad Debt Protection, works as follows:
- As part of an invoice finance facility bad debt protection is an option.
- The invoice finance company credit checks your customers, and assigns credit limits for each one.
- Some providers will allow you to select debtors for bad debt protection, so that you can reduce costs.
- Providing you trade within those credit limits your invoices are covered.
- The covered percentage can vary but it is up to 100% of the value.
- If a covered invoice isn't paid the invoice finance company pays you the balance.
- There may be a "first loss clause" which is like the excess on say car insurance.
What Does Bad Debt Protection / Non Recourse Cost?
The cost of the bad debt protection / non recourse option starts from c. 0.35% of turnover. The cost for your business will depend upon the type of facility that you want and the nature of your business. We can find quotations for you without obligation - we provide independent advice:
Here is some further information that may be helpful:
- Article - The Benefits Of Non Recourse In Avoiding Bad Debts
- Offer - 6 Months Bad Debt Protection For Free
- Case study - Haulage Company Found Non Recourse