EFCIS Trade Credit Insurance Brokers have announced that they are offering members of the UK Fresh Produce Consortium (FPC) a complimentary ledger health check as ‘a business tool for growth.’
Recently, several underwriters have reduced or in some cases have withdrawn cover for suppliers to Iceland, which highlights the current challenges within the sector overall.
Additionally, the IMF have downgraded its forecast for the UK economy and now state it could potentially contract by 0.6% in 2023, rather than grow slightly as previously predicted.
With the impact of the war in Ukraine, high energy costs, continuous low margins, labour shortages, food supply and security, cost of living and the aftermath of the effect of Brexit, there are still many obstacles within the sector that need to be navigated before seeing an improvement in the economy.
Let’s remind ourselves how important the UK Agri-food chain is:
£ 113.2bn contribution to national Gross Value added in 2020
4.1m people employed in agri-food sector in Q1 2022, 13.4% of GB employment
4.1% food and non-alcoholic beverage price increase in real terms in 12 months to August 2022
£2400bn total consumer expenditure on food and drink and catering in 2021
£20.2bn the Value of food and drink exports in 2021
Source: UK National statistics November 2022.
Atradius have published that late payments currently affect an average of 43% of all sales to B2B customers across industries polled in Eastern Europe. The chief reason for late payments across the region was reported to be liquidity shortfalls experienced by B2B customers. In addition, there is deterioration of Days Sales Outstanding (DSO) reported by 48% in the past twelve months.
Commenting on this Andy Moylan CEO, EFCIS said: “We have longstanding relationships with many businesses in this sector and are active members of the Fresh Produce Consortium. During the pandemic we found that many businesses in the sector were understandably focussing on survival, on finding new ways to distribute and of course figuring out how to stay afloat until the storm passed. So, we used some of this time to work with Coface, a leading insurer of Trade Credit Insurance, subsequently developing the first bespoke trade credit insurance policy for the fresh and frozen food sector.”
“Within a few months of restrictions lifting, the phone calls started. Rocketing energy prices plus the unprecedented increase in the cost of everything has underpinned this interest in Trade Credit Insurance. Throughout the UK in general we’re seeing a rise in insolvencies and this trend is likely to increase, overdue payments, and unmanageable debt.
“Cashflow for many businesses is no longer flowing as we move into a challenging period of trading or even a recession. The hospitality sector being hit so hard on all fronts has a knock-on effect on the sector too. So, the demand for Trade Credit Insurance is understandable.
“Businesses are recognising the need for it, and they have some understanding of the benefits. It’s our job to paint the full picture and talk about the made to measure policy we have developed. We’re having many positive discussions with members of Fresh Produce Consortium for example.
“Some already have Trade Credit Insurance and are looking for a root and branch audit of their policy whereas for most businesses they’re new to the table and keen to explore.
“Trade Credit Insurance, in my opinion, should be seen as a business tool for growth and treated as a return on investment.
“To indemnify the current trading risks at an individual debtor level we are offering all FPC members a complemintary ledger health check. This report will highlight individual debtor risk grade and consequently potential default or even payment delays.”
For further information and visuals please contact Andy Moylan at amoylan@efcis.com
