Major energy users’ credit cull

Firms that are big energy users have emergency talks today over the withdrawal of credit lines that has seen some energy suppliers demand payment for gas and electricity six months in advance, the Telegraph reports

The main six suppliers, which include British Gas Business, Edf and E.On, have reduced their credit terms to limit their exposure to businesses failing.

Trade credit insurance has been from some of the businesses has made it worse, said the Major Energy Users’ Council (MEUC).

Andrew Buckley, director at MEUC, said the new supply terms, which were often imposed mid-contract, were affecting mid-size corporates in particular.

It has meant energy bills falling due within seven days, rather than the typical 21 days.

Some companies had been told to pay upfront “They have been asked for two to six months energy consumption,” he said. “One member had been sent a letter that said pay £260,000 in seven days. It’s come as a shock and for some people is quite untenable.”

Are credit insurers to blame?

Richard Tyler, the Telegraph’s enterprise editor ask: “Is this more evidence that the likes of Atradius, Euler Hermes and Coface are undermining companies ability to trade, irrespective of their financial performance?

“Or is this another example of how companies have missued credit insurance in the boom times to support credit lines that should never have been extended in the first place?”