Recession businesses ‘need trade credit insurance’

Trade credit insurance is 'vital' in helping companies survive the current economic troubles, it has been claimed.

John Wright, national chairman of the Federation of Small Businesses (FSB), says that the cover provides a way to increase risk management in the difficult economic climate.

Figures from the FSB estimate the average small or medium-sized enterprise is owed around £38,000, while companies are reporting that it is taking longer for them to see their invoices settled.

Wright explains that small firms automatically suffer when a larger business further up the supply chain fails and says this should act as an incentive to take out cover.

‘It is therefore vital during this economic period that business owners can rely on the protection of trade credit insurance as a buffer when a big contract disappears and while they chase late and unpaid invoices,’ he states.

The commentator also calls on the government to protect small companies by cracking down on the time larger organisations pay them, as well as allowing Companies House to ‘name, shame and fine’ those which settle bills late.

A recent poll by the British Retail Consortium discovered more than two-thirds of small and medium-sized firms claim the reduction or withdrawal of trade credit insurance has reduced their ability to trade.

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