Changes to Credit Insurance scheme good news but fails to hit the mark.
Commenting on news that the Government has widened criteria and dropped charges for its trade credit insurance scheme Edward Rimmer, chief executive at leading independent invoice financier Bibby Financial Services, said:
“At last the Government has realised more needs to be done to drum up usage of its trade credit insurance scheme.
“Since its introduction we have urged the Government to remove the £20,000 lower limit of top-up cover, believing it too low for most businesses in the current environment as most debts remain at the smaller end of the market. Now, however, with this removed, more of the nation’s businesses should be able to benefit.
“Increasing the upper limit to £2million is also good news and broadens the scheme’s attractiveness to most businesses within the UK. However, the scheme still does not include reinstating limits that have been pulled completely and (instead applying only to companies where cover has been reduced, for example from £100,000 to £70,000) the number of companies who could benefit from the revised scheme will remain relatively low.
“Finally, with the current downturn expected to last well beyond the next 12 months, the planned ending of the scheme in December 2009 simply doesn’t provide help for long enough to businesses hoping to trade beyond the end of the year.
“We support the Government in its attempts to attract more businesses to the scheme, but the fact is, take-up remains low. And until the Government can offer even longer terms on this security then I believe this will continue to be the case.”
Posted on 21 August 2009