Credit insurance

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Considering taking out as my main client has 60 days payment terms and I have to pay out on direct costs before this 60 days.

I have rung around and finding it difficult to get cover unless turnover is in the hundreds of thousands.

Can anyone help?

Thanks

There are two different products. Credit insurance only pays out if the person who owes you money goes bust, so it wouldn't help with your current cash flow problems. What you need is called factoring (or sometimes invoice discounting).

Unfortantely, this probably won't be easy to set up for one-off small amounts either - there just isn't the profit in it for the factor/accepter to make the administrtation (including the considerable FSA compliance costs) worthwhile. Your own bank is probably best placed to keep these costs down - ask to talk to your business banker about their factoring services for small businesses.

thanks mrvibrating. whilst i would benefit from both products, it is the credit insurance i need really.

i've got concerns that if the company i am working on behalf of do go bust (given current climate), then i will have a bill for thousands. they are a big retailer.

i have rung around and no-one seems to be doing this type of cover anymore. i think i'm going to just have to take the risk and keep a look out on their performance ongoing.

thanks for posting.

Oh I see - I was thinking that factoring would address your problem of paying out before you get paid.

I don't think the size of your turnover is the biggest problem - it is almost impossible to get credit insurance for retail clients at the moment. The insurers are just as worried as you are!

How about asking for (part) payment in advance/on account? Whoever you are working for is probably a slave to his accounts department's procedures so can't do anything about the 60 days - but if you submit the invoice the day you agree the work (call it a 'stage payment') 60 days will come around a lot sooner!

thanks mrvibrating. i've been having exactly the same conversations about this last week and i'm hoping their legal team will approve the staged payment - i'm hoping for feedback on the t&cs tomorrow, fingers crossed!