Don't wait to check your parachute until you're out of the plane Business failure and insolvency are so rarely a cheery subject. But it's kinda funny how frequently companies hit by high-value losses almost immediately say "we had insurance", as if to say the loss will not be felt too hard. It’s tempting to boast that your debt is insured when it isn’t: it makes the loss seem less …
Quite a few do in my experience, certainly the ones that have survived the recession.
In my experience, the insurance company will require pre-approval of all credit sales, and if you follow their procedures by doing all the required credit checks, using the recommended credit limits and freezing the account and reporting to them in the event of late payments, you won't actually need to make any claims.
When the credit insurers withdraw cover for a particular company, they immediately find themselves unable to purchase any supplies except on COD terms, so that would suggest pretty much everyone follows the advice in this article.
You do work, invoice and if you are lucky after 30 days the company you invoiced might think about starting to process the possibility of maybe one day getting the requisite approvals for the finance department to consider maybe they might possibly put the cheque in the post at the next cheque run if thats not too overfull already...
So you might if you are really lucky get paid in 6, 9 or 12 months.... Alternatively the business will go out of business - yours or theirs - meaning they get something for nothing... well something for your expense.
What is needed is NOT insurance, it is for all UK business to simply stop trading with anyone at all until the government bring in some legislation that means people are paid for the work they do in 5 or 10 working days maximum. Its not that damned difficult. The Germans have laws around this - a payment is late after 30 days - anything after this is base+5%. Personally I'd make it 5 days and base + 200%.
Sometimes the decision to continue to allow sales to a customer having difficulty is based on fears of antagonizing a customer.
I knew of one chemical supplier that had an exclusive relationship with a large US distributor for their product. Unfortunately, that supplier was squeezed by the nads when it came to payment.
They had to wait until the exclusivity agreement ran out before they could dump the customer. Afterwards, they learned their lesson and no longer sign exclusivity agreements.
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