Businesses told to implement robust continuity plans or risk insolvency
Businesses have been warned to check their financial continuity plans and those of their suppliers as insurance safety nets against bad debt are withdrawn.
This comes as over 12,000 businesses have had their credit insurance cover withdrawn by the UK’s largest credit insurer, Atradius.
Trade credit insurance has long been a cover for small to medium businesses reassuring them that they were protected from bad debt, particularly when supplying to larger companies.
According to the Insolvency Service, companies going into liquidation have increased by 32% since January.
This has signalled the withdrawal of cover by some of the largest trade credit insurers, leaving tens of thousands of small to medium businesses directly exposed and many thousands indirectly exposed to extremely bad trade debt.
Tony Gimple, director, Crisis Survivor said: ‘There was a time where businesses could rely on credit insurance and focus more on the important aspects of running a business, but now times have changed. Many companies fail to take account of their supply chains and even if they are adequately protected they may be exposed to companies further up the food chain. We urge businesses of all sizes and particularly small businesses, to re-evaluate their own credit control strategy and to ask their suppliers to do the same.’
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