Companies factoring their invoices often wish to take
advantage of credit insurance or bad debt protection and this can be achieved
in one of two ways. Some factoring companies offer a non recourse factoring
facility, which as the name suggests is without recourse to the client in the
event of the failure of the customer.
The factoring company will underwrite individual credit limits on each customer
and will accept the bad debt loss in the event of the insolvency of that
customer up to the agreed limit.
The advantage of this facility is that the client only has to deal with one company but the
disadvantage is that the credit limits on offer are sometimes restrictive
as the factoring company will look at it’s own overall indebtedness to a
company and when it feels that the overall exposure is high enough will
probably cease to underwrite new limits. This means that a factoring company’s
client wishing to sell on an insured basis to a well known name may find that
he can only obtain a derisory limit as the factoring company has reached it’s
own limit.
An alternative is a factoring facility without credit cover plus a separate credit insurance policy
as this has the advantage of greater flexibility. There are a number of credit
insurance companies in the market place all having different strengths
and weaknesses and the art is knowing which insurer will give the best levels
of cover at the most competitive cost.
Whilst
we deal with most of the better non recourse factoring companies we
also have a relationship with a credit insurance broker who knows the
insurance market as intimately as we know the factoring market and they can
place the credit insurance with the most appropriate underwriter for the type
and size of company which should result in higher credit limits at lower cost.
Packaging the factoring and credit insurance elements separately allows for maximum
flexibility in choice, coverage and cost and as there are no charges for our
services why not contact Factoring Solutions for an informal chat without any
obligation whatsoever.
Factoring
Invoices UK
5 Torridge, Hockley,
Tamworth, Staffordshire B77 5QL
Tel: 01827
707680
