Brexit – I’m sure you’re fed up of the uncertainty and no one agreeing on a suitable deal, especially when it’s less than 6 months until the UK leaves the EU. Uncertainty is the main cause for concern as it impacts the economy, reduces investor confidence and generally increases the risk of company failures.
The makeup of the Brexit deal remains uncertain. Consequently, it is more important than ever for companies to identify risks to their business. The role of trade credit insurers is to analyse the biggest risk of all, your customers. Demand for trade credit insurance has increased due to the current economic backdrop, which remains unclear. Now, more than ever before insurers have the opportunity to step up to the plate and prove trade credit insurance is essential for any business who sell on credit terms.
The impact on businesses is clear to see as:
- Insolvency levels increased by 2% last year
- There were 40 business failures a day in the UK in the first half of 2018
- Atradius economists are predicting insolvencies will rise by a further 4% this year
- Company failure has occurred chiefly in construction, retail and hospitality sectors
- Claims paid out by Atradius increased in Q1
- Claims paid are 50% higher than the same period last year in Q2
Whenever there is a business failure there are creditors who haven’t and will not be paid. If you were a supplier to one of these failed companies and had no credit insurance a huge dent would be left in your turnover. Profits are likely to be down and inevitable uncertainty is likely in the immediate future. One company failure is likely to result in the domino effect of several failures down the supply chain. Claims that are paid quickly will provide welcomed relief for the insured businesses.
In the past eighteen months, CMR has discovered that many businesses have been taking measures and are turning to trade credit insurance. Enquiries have increased by 54% compared to those in 2016. Should you wish to find out how CMR can help provide the right solution to protect your debtor book please get in touch.