Trade Credit Insurance Extended as CLC Guidance Updated

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THE TRADE CREDIT Insurance scheme has been extended by government by 6 months to 30 June 2021.

The Construction Leadership Council guidance on the insurance has been updated to reflect the latest operation of the scheme and the insurers who are participating.

The pandemic has disrupted activity, cashflow and planning for many businesses putting them at risk of insolvency and defaulting on debt. Trade credit insurance protects businesses from payment defaults on goods or services supplied, reimbursing them up to the credit limit set by the insurer. It’s particularly important in tough trading conditions as it prevents non-payments having a domino effect through the industry.

But the pandemic has caused businesses to find it difficult to obtain trade credit insurance and further hampered their ability to continue trading.

Even when trade credit insurance can be obtained, businesses have seen massive hikes in their premiums, or the level of cover offered reduced. Less cover means businesses are forced to keep bigger cash reserves, impose stricter payment terms on their customers and squeezes smaller construction companies out of business.

Government Trade Credit Reinsurance Scheme

In June 2020 the Government launched the temporary Trade Credit Reinsurance Scheme, which has now been extended until summer 2021.

The Construction Leadership Council (CLC) has produced guidance for businesses in the construction and maintenance supply chain, including builder’s merchants, manufacturers and suppliers. The guidance provides practical advice and considerations for discussions with brokers and insurers when seeking trade credit insurance.

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