Sony boss issues warning
Sony managing director Steve Dowdle has warned that hundreds of independent retailers could go out of business unless the government helps them with trade credit insurance.
Dowdle wants the government to underwrite insurance policies issued by trade credit insurers. A possible scheme could see it underwrite a portion of the risk.
Currently, trade credit insurance – cover for suppliers in case a struggling retailer defaults on payment for goods – is being withdrawn by the big three insurers (Coface, Euler Hermes and Atradius) because they fear retailers won’t be able to pay their suppliers.
Dowdle said if cover was withdrawn, suppliers would demand upfront payment or refuse to supply goods. Shopkeepers would then have go to the banks for an extended overdraft and be forced out of business when the banks hiked the overdraft cost.
Earlier this year, Business Secretary Peter Mandelson said the government was working on a scheme. It is likely to be introduced during the Budget next Wednesday.