protect against rising insolvency

Businesses across all sectors of the food industry have been warned to secure their cash flow and protect themselves against the risk of bad debt in the light of rising levels of insolvencies in the industry over the past year and forecasts for further increases.

This was the advice given to food sector insurance brokers at an industry forum held today by GERLING NCM, one of the world's leading credit insurance and receivables management companies.

The downturn in the tourism industry has had a detrimental effect on food businesses supplying to the catering sector, with the number of insolvencies in the hotels and catering industry up by 37percent in the past 12 months.

Wholesale and retail business failures have increased by 20percent over the same period, and forecasts suggest that companies in the food retail business are in for a tough year to come.

"In this tough climate it is essential that businesses across the whole food industry tighten up their credit management procedures, ensure that their cash flow is healthy and protect themselves against a potentially fatal bad debt if the worst happens,“ said Paula Evans, industry development manager at GERLING NCM.

"But it's not just about bad debts. Finance providers are also tightening their belts, and are being ever more rigorous about who they continue to lend to. Even if you're in a lower risk business, you still need to ensure that your cash flow is strong, and that you remain a viable lending option to your finance providers. If you've got credit insurance you're a much safer bet for them.“

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