Credit insurers take action amid worries about Arcadia Group
Credit insurer Euler Hermes has cut cover to Philp Green’s Acradia shopping empire, which includes Topshop.
Amid brutal trading conditions on the high street, Euler Hermes will reduce the value of goods it will underwrite between point of manufacture and sale on shop floor, according to The Sunday Times.
Credit insurance is vital for suppliers to shops, as it compensates if a shop fails to pay up once supplier goods have been delivered.
Most suppliers normally wait a short amount of time, typically a month, to receive payment on goods delivered to shops.
Cut cover can lead to suppliers demanding payment up front, put pressuring on working capital of the shop. Banks also take a dim view of cut trade credit insurance cover.
Taveta Investments, the holding company for Arcadia, had operating profits halve to £106.4m last year. Euler Hermes said it advised Taveta about the cover decision, according to The Sunday Times.