Suppliers to companies across the industry, including Premier, have had the limits on their trade credit cover reduced or withdrawn as the big three insurers fight to reduce their exposure to the downturn.
“The credit insurance companies have a problem,” said Schofield. “They’re doing this more for their own reasons than because of problems with the companies they’re dealing with. It has harmed some of our suppliers, and we have had to offer help to some of the smaller ones.”
Withdrawal of credit insurance means suppliers are left unprotected if one of their customers fail. However, for many the problem is made more serious because overdrafts from many lenders now require companies to have trade credit cover on customers. “The link between insurance and bank facilities is the corrosive element,” Schofield said. “Otherwise this would just be an issue of insurance being gradually withdrawn just as it is needed. Fifteen years ago there was no such thing as credit insurers. It might be the case we have to trade again without that benefit.”
Schofield said he hoped the Government’s new £20bn loan guarantee scheme for SMEs might reduce smaller firms’ reliance on trade credit cover.
Updating the market on its Christmas trading, Premier reported full-year sales up 9% year-on-year.