The importance of bad debt protection

What Is Bad Debt Protection in Recruitment?

Bad debt protection, also known as credit insurance, safeguards your recruitment agency if a client becomes insolvent and cannot pay their invoices. It acts as a financial safety net, ensuring your business doesn’t absorb the full impact of unpaid debts.

Why Recruitment Agencies Need Bad Debt Protection

As a recruitment agency owner, protecting your cash flow is critical. Without credit insurance in place, your business becomes fully liable for any outstanding client debts. If a client enters insolvency and fails to pay, you could face:

• Significant financial losses from unpaid invoices
• Severe cash flow disruption, making it harder to pay workers
• Potential business risk, especially if you cannot absorb the loss

By securing bad debt protection, recruitment agencies reduce financial risk, maintain stability, and safeguard growth – even when clients face financial difficulties

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.