Timber Trade Federation (TFF) chief executive John White has criticised the government’s trade credit insurance top-up scheme, saying it’s “not worth the paper it’s printed on”.
Following heavy lobbying by organisations like the TTF, the Construction Products Association and the CBI, the government has recently extended its £5bn trade credit insurance scheme to include companies that have been hit by a reduction in cover since last October.
“We were quite hopeful the government would recognise that this issue was a ‘silent assassin’ and that it made life for businesses extremely difficult in a credit-based market,” said Mr White.
But neither the original scheme, launched on May 1 and designed to tackle the sudden reduction in private sector insurance cover against customer non-payment, nor the subsequent top-up version, looks like garnering much interest from the timber trade.
“I am not aware of anybody that has actually applied to the scheme,” said Mr White. “Quite frankly, it’s not worth the paper it’s printed on. Companies still have to bear a cost of the credit insurance – and that cost is prohibitive.”
Mr White said the top-up scheme might bring in a few more companies, but, given the severity of the market conditions, many businesses had already made changes to the way they were operating.
“In the current market conditions, there is a higher risk and companies are going bust,” said Mr White. “Therefore companies have to take a greater responsibility for managing their credit.”
The TTF is actively helping companies with the credit insurance issue. It has already held two seminars, looking at issues such as insolvency law, and is also setting up what it calls an ‘electronic credit circle’ where members can share information and guidance on the steps companies can take to manage their credit.
