Trade Credit Insurance

28th April 2009
In my last entry I mentioned the lack of apparent detail with the latest Government initiative - Trade Credit Insurance.

Another search has revealed a page on the Business Link website which definitely helps, including a document to download.

A study of this, and looking at the situations that we are facing with our clients, it would appear that some of the recent sceptical commentary on this scheme is correct - I really cannot see it having much effect.

The impact of the wholesale withdrawal or reduction of credit limits by the main credit insurers in recent months cannot be overstated. It is dramatic. Yet it has not really reached the headlines in the same way as many other facets of our current economic predicament have. At the very time that businesses need the support and comfort of the knowledge that should one of their customers fail then they will not be hurt, the insurers are reducing cover due to the increased risk! It simply makes no sense.

Two of our clients are facing difficulties because of the actions of credit insurers. Neither of which in our view is fair nor reasonable. The issue is exacerbated by the fact that the insurance is a precondition of funding, so the impact is not just increased risk but reduced cash! The intervention by the Government with its "top-up" scheme is it now seems very restricted and will only give any help at all in the narrowest of circumstances, and not for the very businesses I suspect they think they are helping!

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