Invoice Protection

A wide range of businesses insure invoices against non-payment – a customer not paying an invoice can happen to any business.

If a large part of your work is done with the same customer, or if some of your customers are new or not yet creditworthy, taking out Invoice Protection can safeguard your company in case your customer doesn’t pay.

You will be protected against the non-payment of a valid invoice, either because your customer won’t pay or their business has become insolvent.

You won’t be protected against:

• Non-payment of a disputed invoice
  You’ll need to settle the dispute with your customer before Hokodo will consider your claim.
• Damage or loss of goods in transit
  If you need this cover, it should be covered by your normal business insurance policy.
• Activity by a government which prevents your invoice being paid
  This means events such as war, requisition of a property, currency controls etc.
• Fraud or dishonesty
  You’re not covered for claims which are the result of fraud or dishonesty by your company
• Illegal claims
  You’re not covered for claims which would require Hokodo to breach sanctions or anti-money laundering regulations.

Any invoice you send to another business is eligible for Invoice Protection as long as:

• it’s a valid invoice
• it isn’t too close to the due date
• it was issued within 30 days of the supply of the goods and/or services
• it’s supported by evidence that the customer confirmed the purchase
  This could be a purchase order, email confirmation or agreed contract.

If you only received verbal confirmation of the order, then you can still take our Invoice Protection. However, Hokodo won’t pay a claim for your invoice if your customer disputes having placed the order.

To take out Invoice Protection, you’ll be asked to confirm that, to the best of your knowledge, your customer:

• is not insolvent
• is able to pay the invoice at the time you buy the protection
• does not have any other outstanding invoices with you which are over 45 days overdue.

Hokodo doesn’t expect you to do any further investigation of your customer’s solvency. However if, in carrying out your business, you discover it’s likely that your customer won’t be able to pay your invoice then you must not take out any further Invoice Protection on invoices to that customer.

Find out more about Invoice Protection and how it works.

You have access to Invoice Protection with Hokodo for all eligible invoices. If you have signed up for the Invoice Assistant as a limited company, this means that your first Invoice Protection for that month is free as it is included within the add-on. Your first use of Invoice Protection in a month will be deducted but then refunded to you in your next billing cycle.

Invoice protection is provided by Hokodo Services Limited, who are authorised by the Financial Conduct Authority as an Appointed Representative of Innovative Risk Ltd. Invoice Protection is available for eligible invoices. Hokodo assess invoice eligibility based on a range of factors including the identity of the buyer and how close the invoice is to its due date

Invoice Protection covers 90% of the amount of your invoice, excluding the VAT.

If the invoice included VAT on top of the net amount, you can usually claim VAT Bad Debt Relief from HMRC. Find out more at the Government website:
Gov.uk | Guidance | Relief from VAT on bad debts

Our Invoice Protection is arranged by our partner, Hokodo Services Ltd which is a coverholder at Lloyd’s of London. The policies are underwritten by Lloyd’s which is a specialist in insurance and reinsurance.

After you notify Hokodo about the non-payment of your invoice, the usual process is that Hokodo’s collections partner, STA International, will attempt to collect money for you. If STA achieve this, you’ll get the amount they collected within 14 days of them receiving it. This collections process usually takes from 15 to 60 days.

If STA fails to collect money for you, you’ll be asked to fill in a claim form. Hokodo will pay you the amount covered – 90% of the invoice value – promptly when they get your valid claim form.

Hokodo aims to settle the majority of claims within 15 days of receiving a claim submission. However, a limited number of claims need more investigation and, in these situations, Hokodo may take up to 60 days to assess your claim.

Hokodo’s collections partner is STA International. They have deep industry expertise when it comes to collecting trade debt and they’ll manage the process of getting your debtor to pay.

After confirming the debt with you, they’ll contact the debtor by various channels including telephone, email and post. If this collections process succeeds, they’ll pay you the amount they collect, minus their fee of 6% (+VAT) of the recovered money. You can allow them to also recover this success fee from your customer – this is generally allowed by law. In this case, there would be no fee taken off the amount you receive.

If STA can’t collect the debt within 60 days, you’ll be asked to fill in a claim form. Hokodo will pay you the protected amount – 90% of the invoice value – promptly when they get your valid claim form.

Hokodo aims to settle the majority of claims within 15 days of receiving a claim submission. However, a limited number of claims need more investigation and, in these situations, Hokodo may take up to 60 days to assess your claim.