The importance of bad debt protection

What is bad debt protection?

Bad debt protection is insurance against your end clients that covers your business if the client were to become insolvent.

Why do I need it?

It is crucial for you as an owner of a recruitment agency to have credit insurance in place with your end clients. If you don’t have credit insurance, the agency is liable for the total outstanding debt amount in the event your client enters insolvency. This can put your business in jeopardy, if it’s not able to absorb the loss of payment on these invoices.

How would it affect me?

At QUBA, we can check what credit limit is available on your end client prior to you beginning to work with them. We can even engage with them via an initial phone call. You can request a limit via our DynamiQ platform or alternatively by speaking directly with your relationship manager.

If a client goes into liquidation, QUBA handle the communication with the insurers. We will await payout from the insurers, whilst your agency would be liable for 10% excess in the event of a bad debt situation.

If you had a £50,000 claim, our insurers would cover the £45,000. You would be liable for the remaining £5,000. Without bad debt protection, instead of being liable for the smaller amount of £5,000 (10%) you are now liable for the whole £50,000 (100%).

This is where bad debt protection steps in. With the insurance in place you are covered for 90% of a bad debt situation and liable for 10%. This means you don’t have to worry about the end client’s situation. You also don’t need to stress over your current invoices that are still waiting to be paid by them.

What does bad debt protection do for me?

Bad debt insurance allows an agency peace of mind that they’ve done their best to minimise risk and protect their business. It allows them to determine which clients they want to supply, and how much by.

Starting your own recruitment business is an extremely exciting journey to begin. At QUBA you can rest assured that we will take all the necessary precautions to minimise risk and enable growth.