Suppliers are struggling to find routes to market for big-volume orders, as credit insurance is withdrawn from troubled high street retailers.
Debenhams is the latest retailer to come under pressure as insurers limit their exposure to the department store chain.
Euler Hermes is understood to have reduced cover generally for the retailer, which has issued three profit warnings this year, while insurers Atradius and Coface have refused to cover some new suppliers.
Debenhams insisted it has a healthy balance sheet and cash position.
A spokeswoman said: “All the credit insurers continue to provide cover to our suppliers and we maintain a constructive relationship with them.
“It is well documented that market conditions are challenging, but Debenhams continues to be profitable, has a clear strategy in place and is taking decisive actions to strengthen the business.”
Euler Hermes, Atradius and Coface declined to comment.
Suppliers told Drapers this week that the credit insurance crisis is impacting buying decisions and could drive retailers to source poorer-quality goods from substandard suppliers or to ultimately cease trading.
“One of the biggest issues we are facing is credit and finance,” said one high street supplier. “Retailers are extending payment terms up to 120 days and insurance companies are pulling the plug.
“It is becoming a finance business, not a clothing business,” said the supplier, who said he could not get insurance cover to supply retailers such as Debenhams, New Look and Mothercare. “They may have to resort to suppliers in India or Bangladesh, who don’t look into past payment records as well.”
“The Original Factory Shop [TOFS] is a good example,” said another supplier. “It lost credit insurance and is left scrambling around for goods. Credit insurance can make or break everything at the moment – and as a supplier I can’t afford to take the losses, so it is down to who can actually take the risk.
“[We are] struggling with New Look, House of Fraser, TOFS and who knows what happening with Debenhams. Arcadia is cancelling orders left, right and centre, and the online retailers don’t take the volumes that the high street does.
“For a supplier, it is a risky time not to have credit insurance, but for a retailer, it could make them potentially go under because no one wants to supply them,” he added.
Another supplier added: “The insurers are getting spooked … but the problem is that when credit insurers run for the hills, it can become a self-fulfilling prophecy [for the retailer].”