With businesses across the country facing cash-flow issues, a commercial lender has launched a product to protect SMEs from bad debts.
Bibby Financial Services has announced its Bad Debt Protection product, which it said is aimed at guarding businesses against prolonged default of payment or customer insolvencies. The product provides cash against receivables and protects 90% of the value of any insured bad debt suffered by a business.
"Bad Debt Protection is designed to cover clients if their debtor becomes insolvent or cannot pay. Clients can have peace of mind that cash will continue to flow at a time when insolvencies are high," Bibby commercial director Steven Davies said.
Davies pointed to recent ASIC statistics showing a rise in insolvencies, with 2,618 businesses entering external administration in the December quarter 2012 versus 2,589 a year earlier.
"With demand weak and mainstream financiers scrutinising profitability, small businesses can ill afford to experience bad debts and the loss of ongoing business due to debtor insolvency," he said.
Davies said Bibby's debt protection product managed all administration for debt protection, including reporting, making claims and establishing credit limits on businesses' existing and prospective customers.