Collapse cover scheme extended

A vital scheme plugging a gap in the insurance cover which guards suppliers against clients going bust has been extended by six months because it froze out businesses already affected during one of the most hostile climates in living memory.

The £5bn trade credit insurance top-up scheme covered companies affected since 1 April after insurers increasingly withdrew or slashed cover as insolvencies rose, demanding confidential management accounts instead of less timely annual reports.

The scheme has now been backdated to October last year to cater for companies affected before that date, one leading trade credit insurer said.

Shaun Purrington, regional director of Atradius, said: ‘The original scheme generated considerable interest within the business community. However, the take-up has been lower than expected and we hope the revised scheme will encourage businesses to take advantage of the extended terms.’

The scheme, which runs until 31 December 2009, allows suppliers to purchase government-backed insurance to restore cover to the original level or double the amount they are able to obtain from the private sector up to the value of £1m, whichever value is lower.

But experts have claimed accountants providing better information could improve credit ratings.

‘The question for SMEs is: “How do I improve my credit rating with insurers?”’ said Richard Brooks CEO of FD Solutions. ‘That is where accountants can help. They need to get accurate, complete and timely information to the right parties.’