Recruiters Employ Credit Insurance to Thwart Bad Debts

New Government regulations are putting recruitment firms and employment agencies at greater risk of suffering financial problems caused by bad debts. Changes to the Employment Agencies Act (EAA) mean that even if their customers go bust or do not pay their bills, recruitment firms must now always pay their staff.

Now Atradius, a leading global credit insurer, has introduced the Recruitment Plan, the first credit insurance cover specifically designed for the recruitment sector. The Recruitment Plan protects firms against bad debts from customers that become insolvent or who simply will not pay their bills.

As well as comprehensive credit insurance cover, the Plan also has a built-in debt collection service to recover unpaid debts. If the debt collection route is unsuccessful, Atradius’ credit insurance will cover companies for up to 90% of the bad debt.

Atradius is the first insurer to create a solution that addresses the unique needs of the recruitment sector. Most credit insurance policies only cover debts once a contract has been completed - the Recruitment Plan provides protection from bad debts at every stage of the recruitment process or staff placement.

From the moment an employee starts work the recruitment company is covered, so even if the customer goes bust mid-way through the placement, businesses using the Recruitment Plan will still be able to recoup their losses.

If the risk profile of a customer changes, Atradius will continue to provide the recruitment company with cover while those credit concerns are resolved, so recruiters are not forced to withdraw staff and potentially jeopardise the contract or relationship. In addition, timesheets that are unsigned at the time of insolvency are also covered by the Plan, giving businesses maximum confidence and protection.

Each Plan is designed to fit the needs of individual companies with an agreed credit limit, and can be used for customers based in the UK and overseas. It can be simply and efficiently managed via Atradius’ online system Serv@Net and every customer has the added support of a highly experienced account management team.

Launching the new cover, Jon Lindsay, Atradius’ Director of UK & Ireland,
said: The UK recruitment industry is a vibrant and innovative market, but it is just as susceptible to bad debts as any other business sector. The revised EAA regulations means that firms will still have to pay their staff, even if they have not been paid by the customer themselves. If a business has been saddled with a bad debt and they do not have credit insurance, they will have to find the money to pay staff from somewhere else, slashing their profits.

Credit insurance is a vital safeguard in these instances, but at Atradius we recognised that there was a need to develop a flexible solution that is relevant and can be applied to the particular business practices and trading circumstances recruitment companies face.

The Recruitment Plan was designed using feedback and input from recruitment and employment agencies, using their experiences to get an understanding of what they really need. As employment patterns in the UK change, with more people moving jobs or working on a short-term contract basis, and as the demand for recruitment services in Regions like Asia rapidly increases, the recruitment market will grow, and so will the dangers of bad debts. The Recruitment Plan offers the industry the best protection against the risk of bad debts.

In addition to credit insurance, Atradius offers a wide range of credit management services for small businesses, from credit checking and debt collection through to ledger management services. The company has access to data on over 45 million firms in 40 countries worldwide, so it can provide its clients with vital data on individual business and international markets.