Debtor Protection for Construction Finance

Debtor Protection from Ultimate Finance

Debtor Protection is an optional service you can add to your Construction Finance facility. If a customer becomes insolvent or doesn’t pay, you could recover up to 90% of the invoice or application’s value. We take care of the admin, so you can get on with running your business.

Who is Debtor Protection for?

Debtor Protection is designed for construction businesses that offer credit terms and use Ultimate Finance’s Construction Finance to fund their projects. You can add it at any time: whether you’re new to Ultimate Finance or already have a facility in place.

Why add Debtor Protection to your Construction Financing facility?

Offering credit terms is standard in construction, but it comes with risks. If a contractor becomes insolvent or payments are delayed for too long, it can seriously affect your cashflow and profitability. 

In a sector facing economic uncertainty, long supply chains, and rising insolvency rates, it makes sense to protect your outstanding invoices and applications for payment – the most important assets to your business.

That’s why many of our clients have already chosen to add Debtor Protection to their facility. It gives peace of mind that they’ll be supported if a customer doesn’t pay. 

How Debtor Protection works

In construction, payment delays and insolvency risks are common: especially when working through long supply chains or on large contracts. Debtor Protection helps reduce that risk by providing a safety net to protect against potential losses.

If a contractor becomes insolvent, or fails to pay an invoice or application for payment within the agreed terms, you can claim against the debt and recover up to 90% of its net value.

That means you can confidently offer credit terms, even when working with new clients, knowing that – as long as the debt has been certified prior to a claim – there’s a safety net in place if payment doesn’t come through.

What is covered by Debtor Protection

Debtor Protection covers unpaid invoices and applications for payment if your customer becomes insolvent or fails to pay within 120 days. These are common risks in construction, especially when working with tiered contractors or long payment chains.

What isn’t covered by Debtor Protection

Debtor Protection won’t cover unpaid invoices if the issue is caused by:

• Disputes – If the customer challenges the invoice or application
• Government bodies – If owed by a public sector or government organisation
• Trade issues – Issues related to trade regulations or sanctions
• Damages, penalties, or compensation – Payments tied to claims or fines
• Fraud – If the invoice is found to be fraudulent
• VAT – VAT amounts are not covered 
• Extended payment terms – Invoices with terms over 120 days
• ‘Pay when paid’ clauses– If payment relies on your customer getting paid first.

Types of Debtor Protection 

There are two types of Debtor Protection. Selective cover applies to specific customers you choose. Whole Turnover cover applies to all customers, across all invoices and applications for payment. Both are subject to agreed limits.

Debtor Protection limits: your safety net if invoices go unpaid

A limit is the amount Ultimate Finance agrees to cover if a customer fails to pay. To make sure your invoice or application for payment is protected, you’ll need to apply for a limit using our online platform.

Once a limit is in place, you can update or change it at any time through the same system. We’ll usually confirm whether we can provide cover within 24 hours.

Limits aren’t guaranteed: they depend on a few factors. You’ll need written confirmation about the limits from us before starting any work or supplying materials. Without it, the invoice or application won’t be covered.

Debtor Protection costs

The cost of Debtor Protection is a fixed percentage of your total ledger (plus VAT), depending on whether you choose Selective or Whole Turnover cover.

You’ll also pay a set monthly fee (plus VAT) for any active protection limits. If you make a claim, Ultimate Finance will retain the greater of £1,000 or 10% of the unpaid invoice or application for payment.

All charges will be clearly outlined in your agreement with us.

Not just cover: expert support

Alongside the Debtor Protection itself, you’ll have direct support from our specialist team, ready to help with queries whenever you need them. You’ll also get access to a user-friendly online portal, available 24/7 to manage limits and stay in control.

Add Debtor Protection to your facility at any time 

You can add Debtor Protection whenever it suits you: whether you’re new to Ultimate Finance or already using a Construction Finance facility.

Invoices or applications for payment raised in the 60 days before your facility starts can usually be covered for an additional cost, as long as the debt isn’t seriously overdue.

Your dedicated Relationship Manager will be able to talk you through all the available options.

Start protecting your project cashflow

Speak to your Relationship Manager to find out more or to add Debtor Protection to your Construction Finance facility.