Bad Debt Protection (BDP) covers 95% of net approved, undisputed invoices within the Credit Protected Limit. This article explains what's covered, what's not, and how to make a claim in cases of insolvency or overdue payment.
Contents
What’s Covered
- 95% of the net invoice value (after VAT) within the Credit Protected Limit.
- Applies only to approved debts within your Credit Protected Limit.
- Undisputed debt due by an Approved Client, where all warranties and undertakings have been met.
What’s Not Covered
- Any debt over the Credit Protected Limit.
- VAT + 5% of the net invoice value within the Credit Protected Limit (these are always excluded from protection).
- Disputed debt.
- Invoices dated more than 60 days after the service was delivered.
- Invoices with 90+ day payment terms, unless pre-approved.
- Invoices raised more than 7 days after a client enters insolvency.
- Debt under a Paid When Paid arrangement where the end debtor has Protracted Default.
- Insolvency of an end-debtor in a Paid When Paid arrangement, unless:
- You have confirmed the end-debtor with Sonovate, and
- Sonovate has issued a Credit Protected Limit for the end-debtor.
Examples:
How to Make a Claim
- Trigger: Client insolvency or invoice 60–90 days overdue.
- Inform Sonovate of trigger event through Support Requests in the Platform.
- Sonovate may initiate a claim on your behalf if criteria are met.
Claim Process
- Insolvency
- Sonovate notifies you and requests any final timesheets or invoices within 7 days.
- Calculates and confirms:
- Protected Claim Value
- Unprotected Amount
- Suspends client funding and restricts invoices.
- Credits the Protected Claim Value to your account.
- Protracted Default (Non-payment >60 days)
- Sonovate notifies you and suspends client funding.
- Calculates claim and creates a Reserve for the Unprotected Amount.
- Attempts debt recovery via:
- Internal collections
- External agencies or legal means
- At 180 days past due, the claim is finalised and:
- Reserve is removed
- Outstanding invoices are restricted
- Protected Claim Value is credited
- If insolvency occurs before the 180 days past due trigger, it converts to an insolvency claim and we will finalise the claim at the point of insolvency.
Important Notes
Protected Claim Value is provisional and may be adjusted after validation.
Recovery efforts continue on Protracted Default debts, and reserves may be removed if debt recovery is successful.
Sonovate may request additional support from you in order to perfect the debt (e.g., supplying documentation or clarification).
All communication with the Client must be forwarded to Sonovate, and you must not make any decisions regarding repayment of the debt without Sonovate’s consent.