Recruitment companies of all sizes, from start-ups to multinationals, are vulnerable to the impact of bad debt. When your biggest asset - the sales ledger - is unsecured, one unpaid invoice can have a detrimental effect on cash flow and set-back years of profit and growth. By safe-guarding against the risk of late payment or customer insolvency Debtor Protection can help to secure the future of your business.
James Davies, Managing Director of Strategic Placements, explains his decision to take out Debtor Protection from the Recruitment Finance Division, and how it has assisted his business:
“I already had a confidential invoice financing facility and decided to add Debtor Protection to the package. The price seems small when compared to the potential cost to the business of a bad debt. As well as the peace of mind, the other main benefit of the policy has been the ability to quickly evaluate the credit worthiness of customers. This helps us to spot a potential credit risk, and either decline the business or control the terms and conditions of payment in order to protect ourselves.
“However good a relationship you think you have with a client, there is always a risk attached, and it is vital to be aware of this. Fortunately I’ve only had to make a claim once when a long-standing client, with whom we had a very trusting relationship, had some difficulties and went into administration owing us quite a substantial amount. Because we had followed the right procedures and kept the required paper trail, the outstanding debt was covered by the policy and paid within 30 days. This helped to save us from a serious set-back.
“In addition to offering a valuable safety net against the unexpected, Debtor Protection also provides an important framework for conducting business. My business is stronger as a result of the systems that have been put in place for dealing with clients and payment.”