Despite the construction and automotive industries being some of the most affected in the recession, where suppliers into these sectors have felt the knock-on effect, a Dudley-based steel manufacturer has protected itself against any potential bad debt from its customers with a Debtor Insurance policy from Lloyds TSB Commercial Finance. 

GJN Supplies has been supplying steel to the automotive and construction industries since 1984 and has a £1.5 million turnover.

The business took out the insurance last month and is focussing on new expansion opportunities, safe in the knowledge its income is protected.

Debtor Insurance safeguards a business’ sales ledger by insuring up to 90 per cent of any bad debts suffered as a result of customer insolvency or the non-payments of invoices.

When a previous provider wouldn’t insure the majority of the business’ contracts, Jon Webb, managing director of GJN Supplies approached Lloyds TSB Commercial, which the firm has banked with since it was established.

Jon explains: “We were introduced to Josh and his team at Lloyds TSB Commercial Finance and we received the kind of service were looking for after our last provider would not insure all of our biggest clients, thereby forcing us to switch.

“If we had not been able to cover all our clients we would have had to trade without insurance, which was a route we didn’t want to consider.

“In this economic climate it is paramount to have cover and Debtor Insurance has given us peace of mind. Thanks to Lloyds TSB Commercial Finance we can now continue to grow without worrying about the risk of bad debt.”

Josh Burns, Lloyds TSB Commercial Finance’s debtor insurance analyst, said: “Jon came to us after his previous provider couldn’t guarantee insurance for some of the firm’s biggest clients. We offered full insurance which has provided a safety net and allowed the business to continue to move forward.

“It’s essential that businesses manage risk and insure themselves against insolvency, especially in sectors which have been affected by the recession.

“A £5,000 bad debt can create a loss that could require £50,000 of turnover for the business just to stand still and more and more SMEs are taking out Debtor Insurance to provide a safeguard.”

As well as Debtor Insurance being available online to Lloyds Banking Group customers, it can also be used by non-customers and all firms that sell to other businesses on unsecured credit terms, as long as they have more than one client and an anticipated turnover of more than £200,000.

The scheme also includes a credit monitoring service which alerts businesses to changes in the circumstances of their debtors, so they can identify a potential risk before it becomes a bad debt.  Companies are also able to interactively manage the facility online and request limits on their clients.

March 2010