Small Firms Get Protection Against Bad Debts

Atradius has launched two new credit insurance policies designed specifically to help small companies protect themselves against the risk of bad debts.

With the number of UK small business insolvencies still rising* and an estimated 10,000 UK businesses failing because of bad debts**, the threat of not being paid still looms large over small businesses.

To help alleviate this threat, Atradius, one of the world's leading credit insurance and credit management companies, has launched two new credit insurance policies designed specifically to help small companies protect themselves against the risk of bad debts.

Over 15,000 UK businesses failed in 2003***, the majority of which were small companies with cash flow problems caused by late and non-payment.

The new insurance products from Atradius can help firms recoup their losses if their customers are declared insolvent or cannot pay their invoices.

The two new products are the first credit insurance policies that have been specifically designed for small businesses.

They provide cost-effective and straightforward protection against bad debts for firms that have previously considered credit insurance too expensive or unsuitable for their size of business.

The products have been designed for businesses with a turnover of up to £2 million, with premiums costing from as little as £1,000.

Jon Lindsay, Atradius's Director of UK and Ireland, says: "Credit insurance has been an important tool for lots of big businesses for many years, but this is the first time that smaller companies have been able to benefit from its protection and peace of mind.

"Business failures are likely to increase this year, especially in the manufacturing and construction sectors, and that could have a knock-on effect on other companies.

For smaller businesses the impact of a bad debt from a customer can be devastating, so credit insurance can play a vital part in a safeguarding a company's future." The two new Atradius policies are especially good for small businesses and new companies in their early trading years.

The first is the Insolvency Policy, a credit insurance policy that gives protection against non-payment by UK debtors whose businesses have failed.

The second is the First Risks Policy that covers both payment defaults and insolvencies by UK and foreign buyers in mature OECD markets.

Both offer instant decisions on credit limits through an uncomplicated online service.

Unlike other credit insurance policies, there is no minimum threshold and they are aimed at firms that have previously had no access to credit insurance or who considered it too complex and not cost efficient for their business.

If a company suffers a bad debt, the insurance could cover the loss up to 90 per cent of the value of the invoice.

Jon Lindsay continues: "These new policies mean that our range of products now covers all sizes of business, to help as many different companies and trading circumstances as possible.

Which policy is most appropriate will depend on the type and amount of cover required.

"For those new to credit insurance, the Insolvency Policy will be a good introduction, and when a company needs more cover, it can trade up to the First Risks cover and then the more comprehensive Atradius Compact Policy.

We believe the new policies offer the most economically priced cover in the credit insurance market." In addition to credit insurance, Atradius offers a wide range of credit management services for small businesses, from debt collection through to ledger management services.

* Small Business Service.

** Business Europe, January 2004.

*** DTI insolvency figures for England, Wales, Scotland and Northern Ireland, February 2004.

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