A Dudley-based IT recruitment firm has successfully safeguarded itself from the effects of a customer’s insolvency using a Debtor Protection policy from Lloyds TSB Commercial Finance.
Established in 2000, Concept Information Technology supplies trained engineers and IT staff to public sector and private sector firms on temporary and permanent contracts.
The firm is set to capitalise on demand and achieve a turnover of £5.8 million this year, up from £3.4 million in 2008.
However, the company’s success was threatened when one of its customers became insolvent, leaving a significant outstanding debt.
This would have considerably impacted the business’ cash flow had management not had the foresight to put in place a Debtor Protection policy with Lloyds TSB Commercial Finance in 2007.
The trade credit policy protects a company’s working capital by ensuring it receives payment of outstanding invoices should a customer become insolvent.
Within just 30 days of its client filing for administration, the firm received payment from Lloyds TSB Commercial Finance.
As well as protecting the company’s sales ledger, Lloyds TSB Commercial Finance is also providing an asset based lending (ABL) facility to support the company’s ongoing expansion.
Chris Short, managing director of Concept Information Technology, commented: “Taking out a debtor protection policy has provided us with long-term peace of mind and has ensured that we’ve been safeguarded against bad debts.
“Knowing that our working capital is protected has enabled us to continue our growth strategy and expand our client base further without fear of future failures – something that has helped us to achieve record turnover despite the tough economic climate.
“The policy also complements our ABL facility, which releases the value of our existing assets to help us maintain a healthy cash flow and manage the costs of weekly wage bills.”
Alex Fiddian, client manager for Lloyds TSB Commercial Finance, said: “It takes only one bad debt to significantly impact a business’ cash flow. We are seeing more and more of our customers use debtor protection policies as a safety net to protect themselves from defaults.
“In the current economic climate, it’s essential that businesses manage risk and insure themselves against insolvency so they can focus on their growth strategies.
“It can take only one bad debt to unhinge years of hard work and derail a company’s ambitions for the future.”
December 2009
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