Retailers have voiced their concerns that trade credit insurers do not assess risk accurately and said that the Government’s temporary Trade Credit Insurance Scheme was yet to help their business.
38% of large retailers and 28% of small and medium-sized retailers revealed in the British Retail Consortium’s Quarterly Credit Conditions Monitor report today, that the reduction or withdrawal of credit insurance has negatively impacted their businesses over the last year and want the Government’s trade top-up scheme extended beyond the end of this year.
The temporary Trade Credit Insurance Scheme introduced by the Government in its April budget comes to an end on December 31 and 77% of large businesses and 59% of smaller retail businesses believe this should be extended, said the BRC.
95% of small and medium-sized businesses and 85% of large retailers said that the top-up scheme was yet to help their business. 92% of large firms and 74% of small and medium sized firms also feel that trade credit insurers do not asses risk accurately.
One retailer criticised credit insurers for applying “industry-wide criteria to individual companies without looking at specific company circumstances. It is easier for the risk assessors to just repeatedly say ‘No cover’ rather than argue for the insured company.”
Several retail businesses including sportswear retailer Blacks and Mosaic – the parent company of chains Oasis, Karen Millen, Warehouse and Coast before it fell in to administration in March - were severely impacted by the withdrawal of credit insurance.
BRC business environment director Tom Ironside said: “It’s vital to retain credit insurance – especially in the important run-up to Christmas period and beyond.
“The top-up insurance scheme is due to finish at the end of this year and VAT is returning to its higher level at the same time. To prevent the retail recovery and the three million jobs provided by the sector being undermined, the top-up scheme must be retained into 2010.”