Debenhams will likely have to contend with upfront payments for its suppliers, if reports of further trade credit insurance woes are to be believed.
Insurer Atradius is said to have withdrawn 100% of cover following a previous cut. This follows multiple reductions by fellow provider Euler Hermes.
Prior to the adjustments, the department store chain normally paid suppliers after two months, according to The Sunday Times. Now, with Atradius reportedly pulling cover altogether, suppliers might not have that luxury to wait.
“Regrettably, we understand Atradius is reducing cover as a result of repeated press speculation about Debenhams,” a City A.M. report quoted the high street name as saying. “Credit insurers typically tighten cover when the retail industry is under pressure, and this is an issue affecting many retailers.
“We are managing this with our suppliers and continue to maintain more than adequate headroom on our facilities.”
Last week the Association of British Insurers published second quarter data on trade credit insurance payout in the UK, saying the collapse of construction giant Carillion had a ripple effect. The record amount for the quarter, based on figures from nine insurers, reached £92 million.