Business collapse shows importance of trade credit cover

Business collapse shows importance of trade credit cover | Insurance Business

Business collapse shows importance of trade credit cover

The collapse of high profile fashion labels Marcs and David Lawrence can be used by brokers as a way to drive client interest in trade credit cover.

The two brands, with debts close to $30 million, announced that they had moved into voluntary administration yesterday with 1,200 workers in Australia and New Zealand facing an uncertain future.

Mark Hoppe, managing director of the Australian branch of Atradius, said that brokers should use the cautionary tale of Marcs and David Lawrence to help clients understand the risks they face.

“Even though it might not be their industry, nearly every business has got a large exposure on their books who they are not worried about because they know their name and they have dealt with them for 20 years,” Hoppe told Insurance Business.

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“You’ve got to look at everyone. In 99.9% of cases there is no risk there but you just don’t know which ones they are.”

For brokers, Hoppe said that asking clients about their business rather than telling them the coverage that they need is a good starting point when dealing with trade credit cover.

Questions on terms of transactions and the size of a business’s largest exposure can prove key as a way of helping a client understand the extent of their risk.

With the end of financial year in sight, Hoppe noted that now is a good time for brokers to approach clients on coverage. With budgets for the next year already drawn up, keeping credit cover top of mind could be the difference between a business failing or succeeding should the worst happen to a supplier.

Hoppe stressed that uncertainty remains in the trade credit market. Last year, insolvencies peaked in the first part of the year and Hoppe said that businesses without insurance are left scratching their heads when a large supplier fails.

“With a name like this [being impacted] it can happen at any time to anyone,” Hoppe continued.


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