Credit Protection

 

Credit protection through an invoice finance facility mitigates the impact of a bad debt, or a protracted dispute by the financier assuming the risk of non-payment by your debtor.

Although no business likes to think about it, it’s a fact of life that everyday businesses can enter formal insolvency. If this business is a customer of yours, it can prove extremely difficult to recover what you are owed.

How much turnover would be required to replace a £10,000 bad debt? Depending on the business’ net profit margin (NPM), a £10,000 bad debt requires:

1% net profit margin

5% net profit margin

10% net profit margin

Benefits of Credit Protection

Peace of mind

As long as you are trading within the agreed credit limits and adhere to the terms and conditions of the facility, you can relax knowing that if any of your customers go into formal insolvency or engage in a protracted dispute, your business will be free from the risk of non-payment.

Expand safely

Replace turnover quickly and expand into new markets. Use the financier’s customer risk departments to undertake due diligence into the creditworthiness of your existing and new debtors, so that you can ensure that your growth is safe and protected.

Types of Protection

Bad Debt Protection helps you to manage the risk associated with new customers and markets, but the threat from existing customers is also reduced. Protection can be tailored to your businesses requirements but typically three types of facility are available:-

Whole of Turnover

This is the most common and wide ranging type of policy. It covers your entire sales ledger against non-payment through default or Insolvency and is structured to suit your company’s specific needs and objectives.

Specific Account

Designed to cover a named debtor, this type of protection is usually applied to the largest account on the sales ledger. The business is then free to pursue other opportunities, confident in the knowledge that its greatest risk is protected.

Catastrophe

Most medium and large businesses can absorb a reasonable level of bad debt, but for any company, a single major catastrophe or series of failures can be devastating. Catastrophe protection is designed to protect you if the worst happens.

Credit Protection
Protect your credit
Credit protection products

Larger debtors are usually vetted via a quick response online credit limit request system or in consultation with the provider’s credit risk specialists. However, for smaller debtors a discretionary facility can be established. This provides the dual benefit of allowing speedy decisions to be made at your own discretion while ensuring your ledger is completely protected.

Oakmead Finance Ltd is an appointed representative of HL Partnership Limited which is authorised and regulated by the Financial Conduct Authority.

Oakmead Finance Ltd is a company registered in England & Wales with company number 09478864. The registered office address is 33 Clarendon Way, Chislehurst, Kent, BR7 6RE.

The information contained within this website is subject to the UK regulatory regime and is therefore targeted at consumers based in the UK.