What is Bad Debt Protection And Non-Recourse?
Bad Debt Protection (BDP), 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.
BDP can be added to an invoice finance facility.
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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 between providers, 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 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:
Further Infomation
Here is some further information that may be helpful:
- Article - The Benefits Of Non-Recourse In Avoiding Bad Debts
- Blog Post - How To Mitigate Against Customer Payment Default
- Offer - 6 Months of Bad Debt Protection For Free
- Case study - Haulage Company Found Non-Recourse
