BExA joins industry calls for critical government-backed trade credit insurance scheme

As UK businesses struggle to cope with the fallout of the Covid-19 outbreak, BExA has written to Chancellor Rishi Sunak, urging government to act swiftly in providing a trade credit insurance scheme to enable firms to continue trading and to secure future orders.

Trade credit insurance, as provided by underwriters, protects businesses against the risk of default by their customers. For many businesses, this kind of cover is pivotal to their very existence, but its availability going forward is likely to be reduced given the expected sharp rise in insolvencies across many sectors as a result of the current pandemic.

Without the backing of a reliable insurance product, businesses – especially SMEs – will be unable to offer credit terms and will face severe cashflow constraints by having to purchase goods on a cash basis or take on additional debt.

In recent weeks, governments across Europe have been engaging actively with the credit insurance markets in their countries to ensure that credit insurance underpins the financial support measures that these countries have implemented to ease the impact of Covid-19 on businesses.

While BExA and its members have welcomed the various business and financial support measures that HM Treasury has unveiled since the start of the pandemic, unlike in other European countries, these initiatives have not yet addressed the private credit insurance market. As such, UK businesses are several steps behind their European competitors, pushing UK trade into an untenable, and potentially irretrievable position.

Posted 24 April 2020