Thursday, October 9, 2008
Last credit insurer pulls out of Woolworths
High street chain’s woes deepen as Corface withdraws cover for suppliers amid concerns for retailer’s financial health.
French insurer Corface has now withdrawn its cover to Woolworth's suppliers. The news follows that of Euler Hermes and Atradius, which had already taken similar steps.
There are fears over the future of the business with no big credit insurers now covering suppliers of the retailer, which will no doubt result in disruptions to the supply chain.
It is common practise for businesses, such as Woolworths, to pay for goods as much as 90 days after receiving them, meaning wholesalers are often inclined to take out insurance to cover them if the company struggles to foot the bill.
With wholesalers unable to take out insurance with Woolworths, they may start to insist on quicker payment or even cease supply altogether, having a knock-on effect on the retailer's cash flows.
However, a spokesman for the company said that Woolworths, "is comfortable with the financial and cash position of the group".
He added: "A substantial proportion of Woolworth's Retail suppliers have traditionally operated without credit insurance and we are confident that we will be able to ensure a successful Christmas for all our suppliers and customers."
Corface has also withdrawn its cover to suppliers of sports retailer JJB.