Few recruitment agencies have remained untouched by the blight of bad debt. When a client fails to pay, it can have a devastating impact on your cashflow and even if you have access to alternative finance, dealing with the fallout is still time-consuming and costly.
Despite welcome news that the level of company insolvencies in England and Wales fell in 2014, the problem of protracted late payment remains with many agencies left with outstanding debts totalling thousands of pounds each year. Most agencies specify payment terms of 30 days in their contracts, but find they can wait two months or more before a payment arrives.
Unfortunately, many recruitment companies are simply not protected against any shortfall caused by unpaid invoices (as opposed to bad debt arising from insolvency). Nor do they always have the back office resources to invest in chasing the culprits. In fact, many are understandably wary of challenging important clients or exercising their right to charge interest under late payment legislation.
But recruitment agencies are not totally defenceless against defaulters. One increasingly popular option is Coface’s credit insurance which provides ‘wrap-around’ credit management support, including:
- Credit information – Access to information about the trading behaviour of over 65 million companies worldwide so our clients can evaluate their trading risks effectively. Coface uses this data to produce detailed business reports, credit reports, and customised credit opinions which evaluate the risk of default for a specific amount of credit.
- Comprehensive credit insurance – Coface has a range of credit insurance products to meet the needs of different recruitment agencies, from whole-turnover policies to specific cover for strategically important clients. Most importantly, we cover both insolvency and late payment (factoring companies typically deal with insolvency only).
- Invoice collections – Coface has a trained collections team who can recover payments professionally and at a fraction of the usual time and cost. Our collection agents are multi-lingual and experienced in debt collection in the UK and overseas.
At Coface, we have more than 25 years’ experience in the UK and have worked extensively with recruitment agencies. This means we can accommodate the particular challenges facing our clients, from the disruption caused by delayed time sheets, to the need to encompass temporary and permanent contracts in one credit insurance policy. This means the terms we agree with recruitment companies have been tailored to their requirements.
Equally importantly, our recruitment agencies can transfer to another funding company in the knowledge that our policies will be acceptable because of Coface’s AA-rating. In fact, many clients have found that the greater financial security has improved their credit options and borrowing terms.
Finally, the acid test of any credit insurance provider is how efficiently it meets the needs of customers. Coface turns around 88% of credit limit decisions within two days and 79% of decisions are made within one day. Almost 90% of domestic and overseas completed claims are paid within 30 days.
For more information about Coface’s credit insurance for recruitment agencies, contact Christine Cary, Coface’s Business Development Manager at [email protected] or for an instant quote please go to www.safetrader.uk.com