5 reasons why you should consider a standalone policy….
1. Fixed Premium vs Debt Loaded
Many funders policies will give you a ‘rate’ attached to your BDP costs.
They will then charge you for every £ of turnover that you raise through their policy.
As an example – if your rate is 0.4% and your turnover through the funders BDP policy is £5.7m then you’ll pay £22,800.
In comparison, we can usually negotiate a ‘fixed’ rate based on your estimated turnover – so in the above example, if you estimated that your turnover was likely to be £4.5m, but you achieved £5.7m, you would only pay your fixed premium amount of £4.5m x 0.4% = £18,000.
This can greatly assist with monthly budgeting.
2. Gross vs Net Figures
When you pay for your funders bad debt protection policy, you’ll be charged on your Gross turnover loaded through their facility.
With your own standalone Credit Insurance policy, we ask for your ‘Insurable Turnover’.
This is calculated by your gross turnover minus VAT, inter-company sales, any government debt and any sales on cash/payment up front.
As a result we can often achieve cost savings.
3. It’s YOUR policy
In Recruitment, there will often be multiple agencies dealing with the same clients.
Being able to offer larger credit limits could win you the job against your competition.
When the insurers assess a debtor for the funder, they may ‘CAP’ that debtor to a set amount, and the funder will then have to ‘share’ this limit between all of their clients.
When you have your own policy, you are not subject to the same constraints, and your limit is looked at on a standalone basis.
You’ll also be able to have bespoke clauses added, like the ability to cover unsigned timesheets, RPO’s or self-billing.
4. Top Up Facilities
When an insurer turns down your request for a limit, what do you do?
Do you take the risk yourselves, or turn away the business?
When you have your own Credit Insurance policy, many of the insurers offer a top up facility, whereby a nil decision could be topped up to 50k, or a limit of 200k could be doubled to 400k for an additional fee.
These flexible facilities allow you to scale the business without having to take the risk yourselves.
5. Credit Limits and Feedback
When we speak with an agency who has a policy with a funder, our first port of call is to review 10/20 names on their ledger that they want to work with, but have had their ‘hands tied’ as they were not able to get an agreed insurance limit on them.
The feedback is often surprising as we approach a panel of different insurers, all with different appetites, we can usually provide cover for a number of clients that previously were deemed ‘uninsurable’.
We also work FOR the agency – not for the insurer, so we have a vested interest to challenge and appeal negative decisions and to also get to the bottom of the REAL reasons why a limit may have been rejected.
It’s not good enough to just get a simple ‘No cover available’.
We will always try and go a step further and give you as much information as possible, and will even ring other insurers to see what their opinion is, thus allowing you to make an informed decision of whether to trade uninsured, or not.
Conclusion:
Whilst an invoice finance facility with inclusive bad debt protection sounds like an easy choice for a recruitment agency, it is often not the best or even the most cost effective one.
The interesting point here is that Invoice Finance companies and Banks are approaching us daily to provide standalone policies for their clients and prospects, as they are becoming acutely aware of the added value they may bring to their clients.
The funder can be added to the policy as a ‘loss payee’ and then fund invoices up to the credit limits that we can obtain from the private insurance market.
If this sounds like it’s something you should be considering, use the chat box in the bottom right hand side of your screen, or give us a call – we would be happy to explain in more detail.