Retailers and manufacturers are being urged to check their trade credit insurance fits with contingency plans for a potential no-deal Brexit. Risk management consultants at Marsh say some firms are ramping up their inventories in preparation for any delays caused by potential trade restrictions.
Traditionally, buyers purchase goods on credit terms, sell these goods on to the consumer, and use some of the revenue to pay the supplier before the terms of payment expire. By increasing goods quantities, buyers may be unable to generate enough revenue to cover the credit, which increases the risk of non-payment.
Marsh says if suppliers increase the quantity of goods sold to buyers in the UK, they should check they have adequate levels of trade credit insurance to protect them against any payment default.
Approximately half of all of the UK’s food supplies alone are imported, some of which are from the EU.
Brexit secretary Dominic Raab yesterday warned that the EU's "intransigent" approach to talks has increased the risk of no-deal.
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