Credit cover insures suppliers against the risk of their client going bust
Online fashion retailer Boohoo has responded to reports that Allianz Trade had slashed credit insurance for its suppliers.
The Times said in a report last week (16 July 2023) that credit cover had been reduced by an average of 50%.
Credit cover insures suppliers against the risk of their client going bust before payment is received for any goods that have been ordered.
When cover is not available, suppliers may demand payment upfront.
As of February, Boohoo had a net cash position of £5.9m and access to a £325m revolving credit facility.
As a result, it expects to return to profitable growth during the second half of the financial year.
A spokesperson told Insurance Times: “With the credit insurance capacity less than 50% utilised, we wouldn’t expect any real impact from the reduction.”
Credit cover
Allianz Trade was approached by Insurance Times, but it declined to respond.
This came after The Times reported that suppliers for rivals Asos also had their credit insurance cut by Allianz Trade in May.
Read: Insurer calls on government to extend trade credit insurance amid alleged ‘Topshop collapse’
Read: Arcadia collapse alludes to danger of trade credit fallout – Nimbla
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Asos purchased Topshop, Topman and Miss Selfridge’s online entity in February 2021 following the collapse of Aracdia Group in 2020 – this was due to underperformance and high costs worsened by pandemic-related lockdowns.
It saw invoice insurer Nimbla call on the government to extend the Trade Credit Reinsurance Scheme.
This was a scheme launched during the Covid-19 pandemic to support retailers that had to shut physical premises due to the lockdown – it ended in June 2021.
Meanwhile, former British department store Debenhams was also reported to have experienced credit insurance issues pre-pandemic in July 2009 with Euler Hermes, which was rebranded to Allianz Trade in 2022.
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