Construction site crane

3 Interesting Facts about Construction Credit Insurance!

1. Retention Cover 

With margins at historic lows for many contractors, losing 2.5%-5% of your project value can create a cashflow nightmare.
But what if your client goes bust when you are mid project? You lose the current outstanding application values and any retention that’s been raised.

Did you Know?

Abacus can structure a policy that picks up retentions already raised prior to the policy starting, and keeps on covering retentions raised during the policy until they become due. Standard is 2.5% 12 months and 2.5% on Practical completion, but we can look at different values and timescales up to 2 years. Having 90% of your retention paid on top of your current application amounts could be the difference between you making and losing money on a job.

2. Uncertified Applications

When raising applications for works completed, we all know that there are some QS’s that ‘play the game’ and undervalue the application in an attempt to help their own cashflow – its a common problem in our industry. But what would happen if you had a credit insurance policy and your client went into administration before you could get you application certified?

Did you Know?

A bespoke construction policy through Abacus will not only mirror the way in which you raise apps, payment certs, final account etc, but in the event that your client goes into administration before having the application certified, all is not lost. In this scenario, we would look to engage an independent QS to provide a valuation against this application. We would also look to get an interim claim paid on any applications that had been certified, so your cash flow was supported whilst we dealt with the final uncertified application.

3. Binding Contracts Cover

 If you are working on site and you are 2 months into a 6 month project and the credit insurer pulls your credit limit on that client – what happens? Well with a standard policy, you have to take that risk burden on your shoulders, which could also impact cashflow greatly if you are using an invoice finance facility. Contractually, the likelihood is that you can’t just walk off site because the insurer has downgraded their credit appetite.

Did you know?

In our initial consultation, Abacus will discuss the various ways in which we can support you if the above does happen. Depending on the projects and clients, we could agree up to 6 months binding contracts cover. In the above scenario, this would mean that even if the insurer pulled the credit limit for your client, if you can’t contractually leave the site, the insurer would stay on cover for up to 6 months after that point. This gives the insurer time to obtain updated management accounts and/or allows you to finish the current project.

This certainty of cover could prove invaluable.

Chat to us about how we can help protect your livelihood in these challenging times – use the chat functionality in the bottom right hand side of your screen to speak to one of our brokers in real time.