Bad Debt Protection, also known as ‘BDP’, ‘Debtor Insurance’ or ‘Credit Insurance’ is commonly used alongside an invoice finance facility. It provides businesses with comfort that should a customer fail to pay, the loss will be insured, preventing the business from taking the hit.
The popularity of Bad Debt Protection alongside an invoice finance facility is mainly due to the additional risk that your business has borrowed against a debt that is then not paid, potentially creating cash flow problems at a later date. By protecting the businesses debtors with Bad Debt Protection, owners can have peace of mind that the debt will be covered by the insurance.
Some invoice finance providers can also offer Bad Debt Protection at an additional cost to an invoice finance facility, but you can also take out separate insurance policies to protect your business, even if you do not use invoice finance.