The government has agreed to temporarily guarantee trade credit insurance to support businesses struggling to get cover during the pandemic.
The guarantee will help both domestic and exporting companies within the supply chain.
With almost all sectors being financially impacted due to coronavirus, some firms have seen the number of payment defaults increase, making it harder to manage cash flow as well as more difficult to get trade insurance in the first place.
The scheme will launch at the end of this month with the government agreeing to a temporary reinsurance arrangement with trade credit insurers in a move which it hopes will ‘support supply chains and help businesses to trade with confidence as they can trust that they will be protected if a customer defaults on a payment’.
John Glen, economic secretary to the Treasure commented that: “This country’s businesses are crucial in helping us to kick start the economy as we get back to work, and I will do everything I can to help support them through this difficult time.
“By guaranteeing business-to-business transactions currently supported by trade credit insurance, we will help to maintain a vital cog in our economy.”
The Institute of Export & International Trade welcomed the announced, with the director of stakeholder management Kevin Shakespear saying that: “The continuation of a viable trade credit insurance market is essential for UK businesses and maintaining supply chains.
“For businesses selling in the UK, EU and the rest of the world there are benefits to using trade credit insurance to support payment terms, mitigate payment and country risk and in some instances support provision of finance for both UK and overseas sales.”