Trade credit insurance head warns companies to be diligent with Irish clients ahead of Brexit plans
The MD of The Channel Partnership, a leading UK trade credit insurance broker, has warned UK firms to be diligent over offering credit to Irish firms.
Tom Rolfe says that the ‘wrong’ Brexit deal would have an impact on the Irish economy, which in turn would affect Irish companies that are financially weaker or that operate in markets highly dependent on exports to the UK.
“Some credit insurance experts have suggested all Irish companies will be affected by Brexit, but we think this is overly negative. However certain companies will be more vulnerable depending on a range of factors, such as their reliance on trade with the UK market and their financial resilience. Insurers keep a close eye on gearing, financial performance and balance sheet strength.
“The UK market accounts for about 15% of Irish goods exported and 20% of services exported, which means many UK-based businesses dealing with these Irish firms could face increased risk. When insurers think that marginally performing companies are more likely to go bust, then they may review their position on those companies.
“All the credit insurers in the UK market will be trying to understand market conditions in Ireland for the coming 12 months as a routine process because they need to have a view as to the likelihood of claims arising in any market. We can provide advice and guidance on the level of risk within any individual Irish company, and the signs are not always obvious.
“We offer a benchmarking service to compare a company’s own internal assessment of credit risk among their debtors with the credit insurers’ assessment of that risk. This means they can insure against that risk firm by firm, while companies not currently insuring their trade credit risk must be aware of the increased risk of bad debt.”
Government statistics show that imports from Ireland amounted to £21.9 billion in 2018, while more than 3,400 Irish firms trade exclusively with the UK.