Increased risks related to reductions in credit insurance may not hit smaller businesses as many cannot afford such insurance in the first place. Smaller companies that are part of the supply chain, for example medium and small sized scrap yards and manufacturers, may not have credit insurance because it can be up to 4 to 5 per cent of turnover.
The disclosure came from South Wales Chamber of Commerce vice president David Brassey commenting on news that credit insurance for suppliers to Corus had been reduced.
Corus operates large facilities in south Wales including a facility in Port Talbot and one in Newport.
Brassey said: Most contractors that work with Corus dont have credit insurance. Payment from Corus was viewed as guaranteed because they are seen as a blue chip company.
Now with this latest development an element of doubt has been put in. An insurer taking away credit is a warning. But people will probably carry on working with Corus [without insurance or with reduced insurance].
Theres not a fantastic amount of people in the small and medium sized enterprises that buy credit insurance anyway because its quite expensive. It can be 4 to 5 per cent of turnover depending on the sector. Those that do get caught out go bust. But news like this affects confidence, which has a knock-on effect.