Economists' Report predict that business insolvencies could grow by 5%
Tuesday, 7th May 2019 14:28

In response to an increase in insolvencies and non-payment within the UK retail sector, Credit Insurer Atradius has released a Credit Risk Analysis report which highlights the importance of retailers working closely with insurers to enable informed and accurate trade credit decisions based on real-time information. The report is in response to over 2,600 retailer insolvencies in 2018 - a sharp increase from the 2017 figure of 1400.

Atradius forecasts further increases of 5% in 2019, as well as further deterioration in profits for the sector.

Simon Rockett, Head of Underwriting for Atradius UK, said “The retail sector has several factors working against it; high economic uncertainty, lower-than-expected GDP growth, a fall in consumer confidence and low sentiment. Uncertainty linked mainly to Brexit has hampered consumer spending as well as slowing business investment, creating tougher trading conditions. The subsequent slump in sales and postponement of investment decisions has ramifications for large and small retail businesses alike; the industry is undergoing a period of correction and those who fail to adapt will face serious trouble.”

“With this backdrop, information is critical. In today’s unpredictable and fast-moving climate, businesses cannot rely on recorded financial reports or dated information; real-time data and insights are pivotal to making the most informed trade credit decisions. Atradius monitors developments in the sector continuously, allowing us to make the most accurate risk assessment and underwrite appropriately on a case-by-case basis. We seek out information from our customers’ customers and build up close-working relationships with them to understand their financial position and, importantly, to be alert to any changes in payment behaviours and the potential risk of non-payment. Should this risk be too great, we will protect our customers by warning them accordingly. By return, we urge retailers to be transparent with trade credit insurers at all times and that’s why we offer an open door policy to them.”

“Traditionally, trade credit insurance was seen as a buffer to non-payment – paying out claims should a customer not be paid. However, we are increasingly being relied upon as a true trade partner to business by identifying opportunities for growth and navigating risk which makes trade credit insurance essential in today’s trading environment.”

Story sourced from: https://www.credit-connect.co.uk/commercial-news/corporate-insolvency/business-insolvencies-predicted-to-grow-by-5/