Report: Overdue accounts rise 400%

Overdue accounts are up approximately 400% on this time last year, according to Trade Credit Brokers.

Ireland’s largest independent specialist credit insurance broker said significant drops in working capital and the banks reigning in of credit facilities in a variety of sectors are at the root of the problem.

Una Nesdale of Trade Credit Brokers said: "Defaults on accounts have led to a real element of uncertainly in the market. Suppliers are aware of the funding difficulties that exist and as a result they are shying away from providing products to those businesses who cannot guarantee repayment.

"There is a distinct lack of confidence between debtors and creditors at the moment which is obviously not conducive to a vibrant and buoyant market.

This market uncertainty has culminated into a situation whereby many suppliers are unwilling to supply stock required to maintain trade without the reassurance that they are guaranteed payment.

According to Trade Credit Brokers, the main methods of ensuring this certainty are bank guarantees, trade credit insurance or up-front cash payments.

However, Una Nesdale said that credit insurance can still be secured for a significant number of clients in most business sectors - which will promote supplier confidence who in turn will be willing to provide larger quantities of produce.

The willingness of some suppliers to provide goods only on guarantee of payment has lead to a stark increase in the demand for credit insurance.

Overall demand is up substantially on last year as banks insist that key debtors are insured before they will extend further credit and the credit insurance market is expected to double or even treble as auditors and other business advisers insist that businesses have this insurance in place.

Ms Nesdale said: "Many banks will play ball, but the new reality is that banks are more willing to extend credit if the customer has trade credit insurance in place for its principal debtors effectively reducing the risk for both the business and the bank."