Agency failure insurance

[Lewis]

What with all these threads about agencies and umbrellas going bust. I am just reading up on the PCG agency failure insurance. What are people's thoughts on it?

I think it is a brilliant idea, but it is a shame there are limits on the payout (aggregate limit of £250,000 and maximum amount of £5K). Presumably if you have £10K outstanding and there are 100 other contractors in the same boat then the £2,500 payout, although better than nothing, isn't that great.

Are there any products out there that offer full protection?
i.e. full repayment in event of agency failure.

[BoredBloke]

How much do factoring services cost? Not done a search because I'm too lazy

[WindyAnna]

I did look into insuring the full debt after Futuro went bust, couldn't find anyone else except PCG offering specific insurance for agency going bust.

Did find a couple of companies prepared to insure debt and would cover for writing off customer bad debt including in case of administration. It was not cheap and based on all sorts of criteria that Futuro certainly didn't meet - for example when each creditor was added to the insurance they were subject to credit check and the premium adjusted accordingly - Futuro's credit score was in the gutter and the premium would have been almost equal to the amount they owed me! Also the point at which they would pay out was when all reasonable options had been exhausted - which could mean after a full administration and winding up process - so potentially years. It also required me to set and manage a credit limit that they advised based on the score of each customer. It wasn't really designed round contractors at all - more small business with debt shared between multiple customers.

Can't even remember the company name but think I googled "insure bad debt"

Windy

[malvolio]

The PCG deal is pretty much unique, AFAIK. Obviously it can't be for too much since nobody is going to take on an unlimited liability. What it offers, in effect, is living money while you sort out the financials with the agency's administrators.

And it's free with PCGPlus, of course....

[zathras]

What with all these threads about agencies and umbrellas going bust. I am just reading up on the PCG agency failure insurance. What are people's thoughts on it?

I think it is a brilliant idea, but it is a shame there are limits on the payout (aggregate limit of £250,000 and maximum amount of £5K). Presumably if you have £10K outstanding and there are 100 other contractors in the same boat then the £2,500 payout, although better than nothing, isn't that great.

Are there any products out there that offer full protection?
i.e. full repayment in event of agency failure.

£5K is the limit on the small claims so anything below that removes the need for a solicitor.

That said I would be seriously uncomfortable with someone owing £10K. For some that is 3 months billable time. As a rule of thumb one should deal with bad debts quickly not wait till the end of the Qtr before chasing them. On the phone 24 hours after the bill comes due!

[Lewis]

That said I would be seriously uncomfortable with someone owing £10K. For some that is 3 months billable time.

It's less that 1 month for a lot of investment banking contracts in London. If an agency goes bust I expect quite a few people to be owed at least that (if they are on monthly pay cycles).

[b0redom]

For some that is 3 months billable time.

That would be £3,333/month or £40k / year. Why would you bother contracting at that rate? A permie role would presumably be better...

[malvolio]

That would be £3,333/month or £40k / year. Why would you bother contracting at that rate? A permie role would presumably be better...

But real contractors have been known to do more than one thing a time... Wasn't that long ago I was billing three concurrent jobs at a total of just under £5.5k a week for a (sadly very short!) while.

[rootsnall]

The PCG deal is pretty much unique, AFAIK. Obviously it can't be for too much since nobody is going to take on an unlimited liability. What it offers, in effect, is living money while you sort out the financials with the agency's administrators.

And it's free with PCGPlus, of course....

So if I've got PCGPlus then I'll get 5K no questions asked if an agency goes under owing me 5K+ ? Didn't read the small print I'm afraid.

I have noticed my agency has sneaked in 30 day payment terms, previously a few days when I was last with them. That means you are looking at 2 months minimum at stake before you'll know there is something amiss. I jumped ship immediately when I was last having problems getting paid and sure enough the agency didn't last much longer.

[Lewis]

So if I've got PCGPlus then I'll get 5K no questions asked if an agency goes under owing me 5K+ ? Didn't read the small print I'm

Up to a max of £250K per agency (for all PCGPlus people claiming). So 100 claims means £2.5K each.