Trade credit insurance hits firms
Around half of large retailers claim reducing or withdrawing trade credit insurance has hit their ability to trade.
Meanwhile, 40% of small and medium-sized retailers also say the reduction or withdrawal has undermined their position, according to the British Retail Consortium (BRC)'s Credit Conditions Survey.
Some two thirds of larger retailers think trade credit insurers are not in a position to accurately assess the risk of a supplier not getting paid.
Suppliers that sell goods on credit to retailers are protected against the risk they will not get paid by trade credit insurance.
According to the BRC, if credit insurance is withdrawn, suppliers demand to be paid upfront. This leaves retailers short of stock, creating cash flow problems and costing jobs as retailers divert funds away from wages to pay suppliers.
BRC director-general Stephen Robertson said: "By matching the trade credit insurance that private insurers are willing to provide, the Government can help fundamentally sound businesses weather the recession at relatively little cost. Without this backing, the lack of trade credit insurance will threaten the viability of more suppliers and retailers."