Unpaid invoice insurance: secure your collections

What is unpaid invoice insurance?

Unpaid invoice insurance is a guarantee that enables a company to compensation in the event of non-payment of an invoice by a customer.

In concrete terms, the insurer assesses the customer risk, sets a coverage ceiling and indemnifies the company in the event of a payment default.

It differs from :

• Factoring which consists of transferring invoices to a financial institution for immediate payment (with or without a guarantee against non-payment).

• Recovery which intervenes once late payment has been identified, with no guarantee of success or compensation.

Why take out payment protection insurance?

Taking out payment protection insurance can reinforce your company's financial stability in the face of late payment. Here are the main practical benefits of this solution.

Limit customer risk and secure cash flow

Unpaid Invoice Insurance acts as a safety net in the event of default . The Observatoire de délais de paiement estimates that 15 billion euros the gap in SME cash flow caused by late payments.

By guaranteeing part of the invoice amount, unpaid invoice insurance enables companies to maintain a stable cash position, even in the event of default by one or more customers.

This stability is essential to cope with for fixed expenses, unforeseen events or to invest with peace of mind in business development.

As a result, the company can focus on growth without fear of the financial consequences of non-payment.

Facilitating access to bank financing

Banks assess a company's financial soundness before granting credit. Insurance against non-payment is a sign of prudent customer risk management, and reassures financial partners.

It guarantees better visibility of future cash receipts which improves company profile with funders .

By reducing the uncertainty associated with cash flow, it can make it easier to obtain lines of credit, authorized overdrafts or investment loans .

Improve accounts receivable management

Taking out insurance against non-payment requires a disciplined approach to accounts receivable management .

The company is encouraged to :

• Check customers' creditworthiness upstream

• Set realistic payment terms

• Rigorously meet deadlines.

It implements more reliable processes: rapid invoice dispatch, automated reminders, regular monitoring of collections.

This professionalism reduces the risk of forgetfulness or delays, and optimizes overall debt collection.

How does unpaid invoice insurance work?

Before you can receive compensation, you need to take several steps, from analyzing your customers to managing the claim.

Preliminary analysis of customer risk

Before guaranteeing an invoice, the insurer examines the solvency of the customer concerned.

This assessment is based on financial data (balance sheets, income statements, reported late payments, etc.) and behavioral information.

At the end of this analysis, a warranty limit is defined for each customer. This is the maximum amount the insurer agrees to cover.

This step enables adjust hedging conditions in line with actual risk. It can also lead to refusal of the guarantee if the customer is deemed too fragile.

Claims and compensation

When a customer fails to pay an invoice despite reminders and the contractual deadline has passed, the company can report a claim to the insurer. A minimum delay (often 60 to 90 days after maturity) is required prior to declaration.

Once the file has been accepted (invoice compliant, reminders proven, customer guaranteed), the insurer proceeds to compensation . It generally covers 80% to 90% of the amount before tax of the claim, depending on the contract.

The indemnity is paid within a defined period, generally between 30 and 60 days .

Assistance in collection by the insurer

The insurer can intervene as soon as the first payment incident occurs, often as early as the out-of-court phase. It has specialized teams or partners to initiate reminders, negotiate a payment plan, or initiate litigation if necessary.

This coverage enables the company to save time and collection costs and increase the chances of partial or total recovery of sums due.

In the event of success, the amount recovered is shared between the insurer and the insured, according to the terms of the contract.

What are the criteria for choosing the right unpaid invoice insurance?

Before signing a contract, you need to compare offers according to objective criteria. Here are the key points to consider when choosing the right insurance for your business.

Coverage levels and exclusions

The level of coverage determines up to what amount your receivables are guaranteed. Some insurances only cover customers domiciled in the European Union, or exclude certain business sectors considered to be at risk.

You should also check whether coverage applies to all invoices or only to those issued after prior validation.

Contractual exclusions should be read carefully, as they may concern disputed receivables, isolated overdue items or customers not pre-approved.

Compensation terms and conditions

Each contract includes a waiting period between the unpaid due date and the possibility of filing a claim. This period is generally 60 to 90 days .

Beyond that, there's still processing time which can range from a few weeks to two months according to insurers.

Some contracts require precise evidence (reminders, acknowledgements of receipt, accepted terms and conditions, etc.) to release the compensation.

A careful reading of these conditions is essential to avoid unpleasant surprises.

The cost of insurance in relation to sales

The cost of unpaid invoice insurance is usually calculated as follows as a percentage of sales covered. It varies according to :

• The level of risk

• Company size

• The number of customers to be guaranteed.

This rate generally fluctuates between 0.2% and 1%, but can go higher for risky or low-volume profiles.

This means a trade-off between cost and level of protection Ask for a personalized quote based on your actual needs.

What are the alternatives to unpaid invoice insurance?

While insurance is an interesting solution, it is not suitable for all businesses, particularly those in a start-up phase or with few regular customers. There are other ways of protecting against late payment and securing cash receipts.

Secure payment solutions such as Heropay

Heropay allows you to secure payments even before an invoice is issued. Thanks to a system of pre-authorization and instant transfer at maturity, you can be sure that the customer has the funds and that they will be paid on the agreed date .

Unlike insurance, you don't have to declare a claim: collection is guaranteed upstream . It's a flexible solution, with no long-term commitment, that considerably reduces the risk of non-payment and improves your cash flow visibility.

Internal prevention (down-payments, reminders, general terms and conditions)

Implementing good internal practices remains a first line of defense against non-payment. This starts with :

• Clear terms and conditions

• Setting appropriate payment terms

• Requesting a deposit, especially for major services.

A rigorous reminder process (automated if possible) from the very first delay is also crucial.

Finally, check the creditworthiness of new customers before accepting an order to avoid unpleasant surprises.

How Heropay helps you reduce the risk of non-payment

With Heropay With Hero, you secure your payments as soon as the invoice is created. Your customer pays online via a payment link or QR code, and the money is immediately paid into your Hero account, with the option of transferring it or crediting it to your account. e let it grow at 3% per year (with interest accrued daily and paid monthly) .

No more waiting or reminders: you get paid instantly, and your collections are tracked in real time. Rather than covering the risk after the fact, it eliminates it from the outset.

With late payments on the rise, protecting your receivables is no longer an option - it's a necessity. L' unpaid invoice insurance remains an effective solution for securing cash flow and reassuring financial partners.

However, it is not suitable for all business profiles. Alternatives such as Heropay offer a more direct and preventive approach, guaranteeing collection as soon as invoicing is received.