May 7, 2020
Upheaval in the credit insurance sector is making life difficult for suppliers who want to support retailers asking for more time to pay their bills, according to Amdea chief executive Paul Hide (pictured).
The Association of Manufacturers of Domestic Appliances, or Amdea, represents the vast majority of appliance brands in the UK.
Speaking on the latest episode of the kbbreview Podcast, Hide said that suppliers understood how difficult it was for retailers to trade their way out of this crisis if they can’t order products.
“These retailers are businesses fighting for their survival under enormous pressure and they’re not quite sure where their next pay check is coming from,” he said.
“But this is not suppliers trying to be awkward, this is suppliers in very similar, and difficult, situations trying to work out how to manage their own risks and how to mitigate all those factors that they have to consider for their own business. So it is a complex picture and they’re all trying to find solutions.”
Many appliance suppliers, Hide said, are trading significantly below normal. Most are seeing business at around 50% of expected levels, but those that rely heavily on the kitchen specialist channel have seen drops of up to 90%.
“They are sharing a lot of this extreme pain of turnover, cash flow and fixed overheads, so the challenges facing big businesses are the same as any others.”
Most suppliers use credit insurance to underwrite their debt risk and many of the providers of that insurance have been reducing their credit limits substantially or removing them altogether, Hide said.
“Suppliers have seen their risk of bad debt and their inability to insure against rise exponentially in the last few weeks. That’s all suppliers, not just appliances, and it’s across all retail. So even retailers who are trading to similar levels as before have seen their credit insurance reduced.”
“So I appreciate the pressure that suppliers are under to manage their own credit risks, which are dramatically increasing both from the inability of their customers to generate cash, but also from credit insurance withdrawal and the pressure from corporate head offices to manage the debt.
“But I know that they’re all trying to find solutions and working with us and others to try and find ways to unblock this credit issue so they can support the retail channel.”
Have something to say? Email the editor