How much cover does invoice insurance give?

Usually 75% to 95% of the unpaid invoice, according to ICISA, the international trade body for credit insurers. Coface says up to 90%, Allianz Trade gives 90% on one UK page and 80% to 100% on another, and most of the invoice finance lenders in the table below publish up to 90% or 95%. Close Brothers says up to 100% on customers it has approved. Several lenders work out the share before VAT, including Aldermore, Skipton, Ultimate Finance and HSBC, and some, such as HSBC, don't cover anything above the limit set for each customer (HSBC guide), so what you get back is often less than the headline figure.

A simple example, with made-up figures: a covered customer owes you £12,000 (£10,000 plus £2,000 VAT) and goes bust. If your cover pays 90% of the amount before VAT, the payout is up to £9,000. The initial uncovered amount is £3,000: the £1,000 share you carry and the £2,000 of VAT (plus anything above the customer's limit, if the debt were bigger).

Your eventual loss may be lower than that, because you may recover some money through the customer's insolvency, and you may be able to reclaim the VAT through HMRC bad debt relief if you qualify (see the VAT section below).

Insurance or a promise in your finance agreement?

This guide covers two different things. Trade credit insurance is a policy you buy from an insurer such as Allianz Trade, Atradius or Coface. Bad debt protection added to invoice finance can instead be a term in your finance agreement: Aldermore says its bad debt protection "is not insurance or an insurance product", and HSBC describes its Credit Protection as an agreement to limit its right to make you buy back unpaid debts. With lender cover, the terms that decide your payout are in your finance agreement, not an insurance policy. To compare what each costs, see how much invoice insurance costs per invoice.

Cover from credit insurers

Sources checked 15 October 2026.

Cover from invoice finance lenders

If you use invoice finance, you can often add bad debt protection to the same facility. These are the figures each lender publishes for its own cover. "Not published" means we found nothing on its pages.

Each figure is from the lender's own page, checked 15 October 2026. "Up to" means the most it will pay, not what every business gets. Aldermore and Skipton happen to publish the same 95% and £500 figures; that is two lenders' terms, not an industry standard.

An advance is not a payout

Invoice finance and bad debt protection both quote "up to 90%", but they mean different things. The advance is the cash a lender pays you when you raise an invoice: Time Finance and Barclays both say up to 90% of the invoice. You get that whether or not you have protection. Protection decides what happens if the customer never pays. Without it, you normally have to pay the advance back. With it, the lender carries the covered part of the loss: HSBC, for example, says the protected amount stays available in your facility. A separate insurance policy is different again: it pays you a claim, and gives you no cash up front.

The terms that decide your payout

Ultimate Finance doesn't say how its £1,000 or 10% retention works alongside its "up to 90%", for example whether the 10% is the same 10% you don't recover. Ask before you rely on a figure.

How a customer limit works, in numbers

When you ask for cover on a customer, the provider sets a credit limit for that customer. Coface says it may approve the limit you asked for, approve a lower one, ask for more information, or decline. HSBC says it can change limits and will tell you if it does, and that debts above a limit aren't covered while the limit is exceeded.

A worked example with made-up figures, not any provider's terms. A customer owes you £60,000 including VAT, which is £50,000 before VAT. Its approved limit is £40,000 and your cover pays 90%.

• Covered amount: £40,000, the lower of the debt before VAT and the limit
• Most you could get back: £36,000 (90% of £40,000)
• Initial uncovered amount: £24,000, made up of £10,000 of VAT, £10,000 owed above the limit and £4,000 as your 10% share

So on paper you had 90% cover, but the payout was 60% of what you were owed. That is why the limit on each big customer matters as much as the headline percentage.

That £24,000 is the initial uncovered amount, not necessarily your eventual loss. You may still recover some money from the customer's insolvency or from collection, and the £10,000 of VAT may be reduced later through HMRC bad debt relief if you qualify (next section). How recoveries are shared between you and the provider after a payout depends on your policy or agreement.

VAT: a cash flow cost, not always a final loss

When cover leaves VAT out, the VAT on the unpaid invoice creates an additional cash-flow shortfall on top of your uncovered share. It is not always a permanent loss: if you are VAT registered and have already paid that VAT to HMRC, you may be able to get it back through bad debt relief. HMRC VAT Notice 700/18 (last updated 18 September 2025, read 15 October 2026) sets the main conditions:

• you have already accounted for the VAT on the supply and paid it to HMRC
• you have written the debt off in your VAT accounts and moved it to a separate bad debt account
• the debt has been unpaid for at least 6 months from the later of the payment due date and the date of supply
• the value of the supply is not more than your customary selling price
• the debt has not been paid, sold or factored under a valid legal assignment
• you claim within 4 years and 6 months of the later of the payment due date and the date of supply

Two points matter with invoice finance and insurance. HMRC says relief is not available while a debt stays assigned to a factor; where the agreement lets the debt be reassigned to you, relief becomes available once it is. And HMRC says a payment from your own bad debt insurer does not affect your entitlement. If you use the Cash Accounting Scheme, you only pay VAT on what customers actually pay, so bad debt relief doesn't apply. Check your own position with your accountant.

Late payment, insolvency, protracted default and disputes

• Late payment. A customer who pays late but does pay is not a claim. You get your money, just later. Cover only pays when a covered debt meets the policy's test.
• Insolvency. The customer enters a formal process such as administration or liquidation. Lloyds lists administration, voluntary arrangements, liquidation, bankruptcy and receivership. Coface says there is no collection stage first in an insolvency; the claim goes through the insolvency and policy process.
• Protracted default. The customer still exists but hasn't paid after a set time. ICISA says the policy sets how much collection action is needed and a waiting period, normally up to six months. Ultimate Finance uses more than 120 days. Lloyds describes it as customers who can pay but won't, or won't engage.
• Disputed invoices. A dispute can delay a claim or exclude the invoice altogether, depending on the provider:
  • Coface (delayed): if a dispute is genuine, cover is not cancelled. Coface suspends collection until you and your customer resolve it, and then the invoice can be paid if the customer still can't pay (Coface EasyLiner). TradeLiner has an option to cover disputed claims (Coface TradeLiner).
  • HSBC Credit Protection (delayed): a disputed debt is not eligible, and HSBC removes the funding benefit until the dispute is withdrawn or the debt is proved, for example in court (HSBC guide).
  • Ultimate Finance (excluded): its debtor protection doesn't cover invoices the customer disputes (Ultimate Finance).
  • ICISA (general guidance for insurers): disputes usually have to be resolved before the insurer gets involved (ICISA).
  None of these sets a number of days for resolving a dispute, and the other providers in this guide don't publish how they handle disputes, so ask yours.

Rules you must follow to keep cover

Cover can be lost through your own actions. Ultimate Finance says a limit must be agreed in writing before you supply the customer, or the invoice isn't covered. HSBC says that once a protected debt is 120 days past due, or the customer is insolvent, you mustn't trade with that customer on any terms unless HSBC agrees. On its invoice discounting option, HSBC also asks you to tell the customer about its ownership of the debt within seven days once it is 60 days past due or 120 days from the invoice date, whichever is earlier.

So what should you do?

Start from your biggest customers. Ask what limit each one would get, then work out the most you would get back if one failed. If a single customer could sink you, that number matters more than the headline percentage.

Questions to ask before you choose

• What share of each unpaid invoice is covered, and is VAT included?
• What limit will you set on each of my main customers, and can you cut it?
• Is there a first loss, excess or amount you keep on each claim, and how does it work with the percentage?
• When does cover pay: insolvency only, or protracted default too, and after how many days?
• What happens if a customer disputes an invoice?
• What must I do to keep cover, such as reporting overdue debts or stopping supply?

This page is general information, not insurance advice. Market Invoice does not sell or arrange insurance. The enquiry form below is for invoice finance only, not an insurance quote: it goes to our introduction partner, a UK invoice finance provider, which pays us a fixed fee (how we are funded, explained below the form). Related guides: how much invoice insurance costs per invoice, invoice finance vs trade credit insurance, recourse vs non-recourse invoice finance and what happens when credit insurance is withdrawn.