# Bad Debt Protection | Invoice Finance UK Source: https://www.cashbookfinance.co.uk/bad-debt-protection Last updated: 2026-10-31 Publisher: Cashbook Finance Limited > Optional bad-debt protection for eligible invoice-finance customers, helping protect approved invoices where a covered customer becomes insolvent or cannot pay. FCA-registered UK lender FRN 782472 ## Protect approved invoices when a customer cannot pay. Optional bad-debt protection can sit alongside invoice finance, helping protect your business if an approved customer becomes insolvent or suffers another covered failure to pay. [Start an application](https://www.cashbookfinance.co.uk/apply?product=invoice) Not sure yet? [Check eligibility](https://www.cashbookfinance.co.uk/eligibility) in 2–3 minutes, or [talk to a director](https://www.cashbookfinance.co.uk/book-call). Illustration Approved debtors · if one fails Customer A fails, owing £42,000 Customer A · £42,000 · Covered Customer B · £27,500 · Covered Customer C · £8,200 · Outside policy - **Customer’s status** Covered · approved limit - **Can be paid under the policy** £37,800 - **Your loss** £4,200 Protected proportion 90% Subject to policy terms and limits. Illustrative only: the protected proportion, excesses and exclusions are set out in the proposal. Check eligibility The simple version ### What is bad-debt protection? It is optional cover attached to an invoice-finance facility. If a customer approved under the policy becomes insolvent or fails to pay for a covered reason, the protected proportion of the eligible invoice can be paid under the agreed terms. **In short:** invoice finance helps with when you get paid; bad-debt protection helps with the risk that an approved customer may not pay at all. - **Optional** · Add it where the customer concentration or risk justifies the cost. - **Customer-specific** · Cover normally depends on an approved credit limit for each debtor. - **Terms apply** · Eligibility, waiting periods, exclusions and evidence are set out before cover begins. **In plain English · Bad-debt protection** · Cover for eligible invoices owed by approved customers, subject to credit limits, policy terms, exclusions and claim conditions. It is commonly added to [factoring](https://www.cashbookfinance.co.uk/invoice-factoring) or [invoice discounting](https://www.cashbookfinance.co.uk/insights/invoice-discounting-guide) rather than bought as a standalone loan. **Cashbook Finance facts.** Cashbook Finance can arrange bad-debt protection alongside eligible invoice-finance facilities. Cover is subject to approved debtor limits, policy terms, exclusions and claim conditions; it protects against specified debtor insolvency or non-payment risks rather than guaranteeing every invoice. What it covers #### Protection built around approved customer risk. ##### Approved debtor insolvency Cover can respond when a customer with an agreed credit limit enters a covered formal insolvency process. ##### Protracted default Some facilities may cover persistent non-payment after the contractual waiting period, even without formal insolvency. ##### Eligible invoices Only valid, undisputed invoices within the approved terms and debtor limit are normally protected. **Important:** cover is not automatic for every invoice or customer. Limits, exclusions, notification deadlines and claim evidence all matter; we explain them before you decide. How it works ### Clear limits before you extend the credit. 1 #### Assess the customer Before credit · a limit A credit limit is requested and approved for the debtor. 2 #### Raise eligible invoices Within the limit · on terms Valid invoices within the limit and policy terms are protected. 3 #### Monitor and collect Throughout · tracked Payment performance and adverse events are tracked under the facility. 4 #### Claim if covered On a covered failure If a covered failure occurs, the claim follows the agreed process. The protection works alongside the invoice-finance agreement. It does not remove your responsibility to supply valid goods or services, resolve disputes and follow credit-control and notification requirements. Facility conditions #### Cover is defined by approved limits and policy conditions Do not assume every customer, invoice or insolvency event is covered. The provider, limits, exclusions and claims requirements are confirmed in the proposed terms. **Credit limits** A customer normally needs an approved limit before exposure is treated as covered. **Exclusions** Disputes, late notification, pre-existing problems and non-compliance can affect a claim. **Claims process** Evidence, collection steps and notification deadlines must be followed. Protection sits on top of a facility. [See how invoice finance works](https://www.cashbookfinance.co.uk/invoice-finance). Who it suits ### Useful where one unpaid account could materially hurt. Suitability profile #### Customer concentration A small number of customers make up a large share of your debtor book or monthly turnover. #### Rapid growth You are taking larger orders or extending more credit than the balance sheet could comfortably absorb. #### Long payment terms Your exposure remains open for 60, 90 or more days, increasing the time in which customer circumstances can change. #### Volatile sectors Your customers operate in markets where insolvencies, project delays or sharp trading changes are more common. #### Export customers Overseas debtor risk can be harder to assess and collect, depending on territory and policy availability. #### Contract-led work Individual invoices are large enough that one non-payment would disrupt payroll, suppliers or future delivery. Sounds like you? [Check eligibility](https://www.cashbookfinance.co.uk/eligibility) Before you apply #### What we need to review bad-debt protection. “Before recommending bad-debt protection, I want to understand customer concentration, debtor credit limits and whether the covered risk justifies the premium. If that cannot be explained clearly, the structure is probably not ready.” [Endrit Beqaj](https://www.cashbookfinance.co.uk/endrit-beqaj)What I look for first ##### Prepare properly - [**Bad-debt protection checklist** · Preparation PDF · Use this before applying so the first conversation is specific rather than exploratory.](https://www.cashbookfinance.co.uk/downloads/bad-debt-protection-checklist.pdf) - [**What to prepare** · Application prep · A cross-product guide to references, evidence and secure document submission.](https://www.cashbookfinance.co.uk/downloads/application-preparation-guide.pdf) - [**Pricing and decisions** · Decision context · Review the commercial factors that affect pricing, availability and structure.](https://www.cashbookfinance.co.uk/pricing-decisions) ##### What speeds review - Customer list and requested credit limits - Recent invoice history and payment record - Any known adverse information or disputes - Existing insurance or protection terms if relevant - Concentration risk and the impact of a major customer failure ##### What slows or weakens the case - Invoices already disputed or overdue - Customers that cannot be approved for a credit limit - Late-payment risk being confused with covered insolvency risk Upload them in the client portal, encrypted in transit and at rest **Verify before you share documents.** Three independent registers hold the record for this firm. Cashbook Finance Limited is registered with the Financial Conduct Authority under Firm Reference Number 782472. Registered office: Cumberland House, 24–28 Baxter Avenue, Southend-on-Sea, Essex SS2 6HZ. Companies House 10723098: Active · incorporated 2017. ICO register ZB545200. The register links at the top of this page open each official record. All published figures are collected on the [company facts](https://www.cashbookfinance.co.uk/company-facts) page. Worked example ### When a protected customer fails. Customer A fails owing you £42,000, within its approved limit, with 90% of the debt protected. Protection turns a £42,000 loss into a £4,200 one. - **Debt owed when the customer fails** £42,000 - **Paid under the policy (90%)** £37,800 - **Your loss** £4,200 - **Your loss without protection** £42,000 Illustrative: 90% protection within an approved credit limit, paid under the policy terms. Claims depend on the limit, the policy terms and following them. Quick answers ### Bad-debt protection FAQs. [All invoice finance options](https://www.cashbookfinance.co.uk/invoice-finance) · [Case studies](https://www.cashbookfinance.co.uk/case-studies) · [Factoring vs discounting](https://www.cashbookfinance.co.uk/insights/factoring-vs-invoice-discounting) · [Invoice finance vs business loan](https://www.cashbookfinance.co.uk/insights/invoice-finance-vs-business-loan) · [Invoice finance in London](https://www.cashbookfinance.co.uk/invoice-finance-london) **Is every customer automatically covered?** No. Cover normally requires an approved credit limit for the individual customer, and invoices must remain within that limit and the policy terms. **Does it cover invoice disputes?** Usually not while a genuine dispute remains unresolved. The invoice must normally be valid, enforceable and undisputed before a protected loss can be considered. **Is it the same as credit insurance?** It serves a similar risk-management purpose, but here the cover is integrated with the invoice-finance facility, debtor limits and funding administration. **How much of the invoice is protected?** The protected percentage depends on the facility and policy. We set out the covered proportion, excesses and exclusions clearly in the proposal. **Does it cover late payment?** Ordinary lateness alone is not necessarily a claim. Some policies include protracted default after a defined waiting period, while others focus on formal insolvency. **Can I add protection to an existing facility?** Usually, yes. Approved customers can be added to cover at the start or later, subject to credit limits and the insurer’s assessment. We confirm what is covered before any change takes effect. ### Guides on bad-debt protection - [Recourse vs non-recourse invoice finance](https://www.cashbookfinance.co.uk/insights/recourse-vs-non-recourse-invoice-finance) · Compare - [What makes a debtor ledger attractive](https://www.cashbookfinance.co.uk/insights/what-makes-a-debtor-ledger-attractive) · Guide - [Late payment and UK SME cash flow](https://www.cashbookfinance.co.uk/insights/late-payment-cash-flow-uk-smes) · Cash flow Start an application ### Fund your invoices, and protect them. [Start an application](https://www.cashbookfinance.co.uk/apply?product=invoice) Not sure yet? [Check eligibility](https://www.cashbookfinance.co.uk/eligibility) in 2–3 minutes, or [talk to a director](https://www.cashbookfinance.co.uk/book-call). Introducing a client? [Work with us as an intermediary](https://www.cashbookfinance.co.uk/intermediaries). --- Cashbook Finance. Cashbook Finance Limited is registered with the Financial Conduct Authority under Firm Reference Number 782472. Company number 10723098. Registered office: Cumberland House, 24–28 Baxter Avenue, Southend-on-Sea, Essex SS2 6HZ. Registered with the Information Commissioner’s Office under reference ZB545200. All finance is subject to eligibility, satisfactory due diligence, credit approval and agreed terms. Invoice finance, trade finance and bridging finance may not be suitable for every business. The availability, structure, amount, pricing, fees, security requirements and completion timescales of any facility will depend on the applicant’s circumstances, the quality of the supporting evidence provided and our assessment of the proposed transaction. Any figures, examples, rates or timescales shown on this website are for illustrative purposes only and do not constitute an offer, commitment or guarantee of finance. Terms and conditions apply. Bridging finance is secured against property. Your property may be repossessed if you do not maintain repayments on a loan secured against it. Applicants should obtain independent legal, financial and tax advice where appropriate.