The government has guaranteed payments on goods delivered into wholesalers amid concerns around insurers withdrawing cover for smaller cash and carries.
The withdrawal of cover or failure to increase credit caps was reported to be contributing to outages in depots and subsequently in stores.
Due to the coronavirus outbreak, wholesalers struggling financially are at higher risk of not receiving insurer approval, meaning suppliers would have to foot the bill if the wholesaler collapsed.
Wholesale expert David Gilroy told Better Retailing the government’s support was a “significant move” that will enable retailers to continue receiving their goods. “Many trade credit insurers will be more risk-averse and tell suppliers not to trade to a wholesaler if they think they’re a risk,” he said.
“Many wholesalers have seen a dip into their sales. I know one wholesaler that has lost its trade insurance. The support will help the supply chain massively.”
The support will be available until the end of 2020, giving trade credit insurers confidence to approve purchases between suppliers and wholesalers.
One wholesale boss told Better Retailing that trade insurers have begun withdrawing their terms with wholesalers, while a symbol group boss claimed insurers have refused to extend agreements with suppliers on categories that have experienced sales spikes.
Find out more on our coronavirus information hub for retailers