Trade Credit Insurance intervention could save more manufacturing jobs than furlough scheme.
The UK’s leading trade body for manufacturers of fasteners, forgings, pressings, cold-rolled and sheet metal products has resoundingly welcomed the Government’s decision to guarantee Trade Credit Insurance, a decision it believes could potentially save more manufacturing jobs than the furlough scheme.
Geraldine Bolton, Chief Executive of the Confederation of British Metalforming (CBM), believes that 75% of its 200 strong members have seen cover being reduced or taken away altogether before this timely intervention, which means companies will be paid if a customer defaults on payment.
This will be music to the ears of manufacturers who rely on invoice discounting to fund day-to-day operations and, in recent weeks, have seen a worrying decrease in the value they can claim with Trade Credit Insurance reduced. In some instances, this has dropped from 100% to as little as 25% of invoice totals.
“Over 14,000 businesses use Trade Credit Insurance across the United Kingdom, including a significant number of our members who have raised the importance of finding a solution for this issue,” explained Geraldine Bolton, CEO of the CBM.
“Once you’ve ensured employees have a safe return to work, the next big focus will be on the revival of the business and any owner will tell you ‘cash is king’ and cashflow is paramount – think of a business as a heart and cashflow is the blood that keeps it going!”
She continued: “The Government’s decision to offer a guarantee will give much needed confidence and, in our opinion, will allow supply chains to be reignited.
“It will take down barriers where insurance cover had been removed and mitigates the risk for manufacturers trading within the UK and, importantly, overseas where customers are often more stringent on payment terms.
“The furlough scheme extension was very welcome, but this intervention may save even more industrial jobs in the long-term.”
The CBM will continue to monitor whether Trade Credit Insurance cover returns to a level that supports our members’ cashflow and, any shortfalls, will be immediately communicated to the Department for Business, Energy and Industrial Strategy and the Confederation of British Industry (CBI).