Trade credit scheme helps business
Published: 12 June, 2009
LONDON: The Government’s scheme to provide up to £5bn of additional trade credit insurance to businesses who have suffered reductions in their level of cover …
will be delivered as part of the Working Capital Scheme and will help mitigate the cashflow constraints caused by the withdrawal of trade credit insurance cover and constraints on the provision of working capital that this withdrawal has created.
Until 31 December this year, UK businesses will be able to purchase six months' 'top-up' insurance from the Government if credit limits on their UK customers are reduced.
The qualifying window will be backdated to include any reductions since 1 April.
The scheme comes in response to growing concern from businesses across all sectors of the economy that reductions in the value of insurance cover create pressure on suppliers to shorten payment terms, and can place additional pressure on businesses' working capital facilities.
Under the scheme, suppliers can purchase Government-backed insurance to either restore cover to the original level, double the amount they are able to obtain from the private sector, or £1m, whichever is the lower.
The three largest credit insurers – Euler Hermes, Atradius and Coface – have agreed to offer the scheme to their eligible clients.
Scheme membership has also been opened up to other credit insurance providers with whom Government is currently in discussions.
Eligible businesses should apply for the scheme through their credit insurance provider.
To find out more, view the website.