Construction
Safeguarding your cash flow, stengthening your business
In the fast-paced world of construction, delayed payment, insolvencies, and financial instability can put your business at risk.
At UK Credit Insurance, we provide tailored credit insurance solutions specifically designed for construction companies, contractors, and suppliers. Our expert policies protect your business from bad debts and non-payment, ensuring you get paid for the work you’ve done–no matter what happens.
What are the benefits to Contruction Companies?
Improved Cash Flow
Many contractors utilise Invoice Finance or Factoring facilities. By using a standalone Credit Insurance policy, you can often gain higher funding levels at lower rates. You’ll also look more secure to your banks which may enable better facilities or pricing as a result. Moreover, by drawing down funds against uncertified apps or payment certificates, you get access to YOUR money on day 1 instead of waiting 30/60/90 days for it.
Sustainable Growth
Rapid turnover increases are common in the Construction sector, but this is where many businesses have become unstuck. Taking on low margin, fixed price jobs, and not having an idea of the strength of the underlying supply chain. Why not grow with clients that have been pre-vetted and protect yourself from non-payment at the same time?
Customer Vetting
You have the ability to tap into the insurers extensive database of information on clients and prospects within your ledger. Just because you are paid on time by your client – does this mean that they are not in financial trouble? This proprietary information also allows you to extend larger credit limits to your existing ledger, safe in the knowledge that you will be paid in the event of a claim.
Balance Sheet Protection
Maths is simple right? You are on a 7% margin, and one of your clients goes bust and you have invoices outstanding of 200k. You’ll need to generate close to £3 MILLION of new business to replace that on your balance sheet. Add to that the lost turnover from your client going bust, and it’s not such an easy task. A Credit insurance policy would typically pay you back 90% of this outstanding amount, leaving you in a far stronger financial position. DO NOT UNDERESTIMATE THE IMPACT OF A BAD DEBT.
Cover before you are on-site until you are long gone!
Off-Site Costs
An often overlooked risk in this sector is works carried out off site, or materials purchased or stored for that particular project. For example, steel bought and fabricated for a particular project, client goes bust before you’re on site. Where does this leave you? Well we can look to cover 90% of the costs incurred for this bespoke fabrication which you have spent time and money on, prior to raising an invoice to the client.
Applications for Payment
Raising applications and payment certificates is very common with most work in the construction sector. We ensure that your policy mirrors the way that you raise applications and payment certificates. A little known fact is that even uncertified applications can be covered at the point of insolvency. In this instance, usually an impartial QS will be asked to verify the completed works and this will then be sent to the insurer to make a claim. We also work with funders that are able to advance a large % of an uncertified application on day one instead of being based on the payment certificate.
Binding Contracts Cover
Certainty of cover is key with ongoing projects in the construction sector. Our policies can be structured in such a way that you benefit from up to 6 months continuous cover on a debtor, even if the insurer has pulled or reduced the credit limit. When you have contractual obligations to stay on site, having this certainty of cover is invaluable – particularly if you are using an Invoice finance facility.
Retentions
We can structure a policy so that it can even pick up aged retentions that were raised prior to the policy commencing. With many contractors having to give up 3-5% in retentions, this amount is lost if the client goes bust, often long after you have finished on site. Standard is 2.5% at 12 months and 2.5% on practical completion, but we can discuss other retention agreements.
Growing Your Business Shouldn’t Mean Risking Your Cash Flow
Talk to an expert today- You focus on what you do best – running your business
- Let us take the risk of non-payment away from you
- Sleep soundly knowing your business is secure