Factoring Partners blog

Factoring Partners Blog, 29th April 2016

 

Ever Changing High St
Ever Changing High St

 

This week saw administration for two household retail names, Austin Reed and BHS representing another change to the appearance of High Streets across the UK. As ever the knock on effect of the outcome is likely to be profound with damage to suppliers and their owners and staff. With BHS its estimated around 1000 suppliers are owed circa £52m

The High St has been going through structural change since the arrival of the internet and further disappearances of household names are likely. In both cases, BHS & Austin Reed, possible buyers will cherry pick sites with the balance closing altogether.

Suppliers to both will be hit one way or another not just with potential bad debts but also the loss of future turnover. Its another episode that highlights the need for businesses to consider credit insurance and with further likely casualties there’s even more reason to at least think about this type of protection.

Businesses insure all manner or assets but all too often the sales ledger is ignored which is odd given the value within and the impact losses can have. Average premiums will be around 0.5% although the final figure is subject to a full risk evaluation, and given the ramifications of one, or a series, of bad debts this sort of rate is reasonable.

I dont think anyone knows what the future holds for the High St as we have known it, but suppliers to retailers need to ensure they carefully monitor their retail customers, keeping a close eye on changes to payment timescales and behaviour. Credit insurance needs to be considered and look out for insurers pulling limits or cover on  businesses. They micro monitor some businesses so if limits or cover is withdrawn, beware!

It’s not easy being a supplier to retailers – suppliers to the supermarkets are faced with the supermarkets ever worsening attitude and policies with regard payments and suppliers to other High St retailers face risks as highlighted by the demise of BHS, Austin Reed, Woolworths, Adams, Jessops, etc, etc…………………………………