SMEs in rush to insure against bad debts
Following the collapse of Enron and WorldCom, small, micro and medium-sized businesses have lost faith in blue chip companies and are rushing out to protect themselves from non-payment by debtors.
As a result of such financial implosions, SMEs have turned to non-recourse financing, which not only protects them against bad debt, but also gives them 100% cover on their invoices.
Traditional credit cover offers only 80% to 85% cover, according to Close Invoice Finance, a division of merchant bank, Close Brothers Group, which provides financing services to SMEs.
According to Jane Seymour, managing director of Close Invoice Finance, non-recourse financing gives the client automatic protection ‘for the cost of half-of-one-percent of turnover’.