Allianz Trade cuts credit insurance for Boohoo suppliers – report
Suppliers to Boohoo
Allianz Trade has reduced cover by an average of 50% for Boohoo suppliers, but some have had their coverage level cut to zero, effective from September, reported The Times.
Credit insurance is a vital part of the retail supply chain, protecting suppliers against the risk of customers going bust between the point of accepting an order and payment being made.
Cutting cover means suppliers could demand payment upfront, squeezing a retailer’s cash flow. As of February, Boohoo had a net cash position of £5.9 million. But with it also having access to a £325 million revolving credit facility, it’s unlikely to run out of money any time soon.
That was clear as a Boohoo spokesman told the newspaper: “With the credit insurance capacity less than 50 per cent utilised, we wouldn’t expect any real impact from the reduction.” Allianz Trade declined to comment.
Rival ASOS, whose suppliers had their credit insurance cut to zero in May, has been in a less happy position cash-wise, it seems and had to raise £75 million from shareholders and enter into £275 million of new debt facilities.
