The British Retail Consortium is demanding that the government take action on credit insurance as half of retailers and over 40% of SMEs claim the withdrawal is restricting their ability to trade reports a survey taken by the BRC.

The BRC is urging the government to utilize next weeks budget to tackle the issue and offer top up insurance to credit insurance cover to protect suppliers against the risk of not getting paid.

Nine tenths of SME respondents and two thirds of larger retailers feel trade credit insurers fail to review to the required precision of the jeopardy a supplier could incur by not receiving payment as depicted in the BRC's Credit Conditions Survey released today.

The survey also reports over a third of SME retailers have noticed a reduction in bank lending, 89% of which have experienced negative affects to their businesses because of this and 75% have been forced to cut stock whilst 30% have made staff redundancies.

If credit insurance is withdrawn suppliers will therefore have to be paid upfront causing retailers to experience cash flow problems and can lead to shortages of stock available in store whilst cutting staff as retailers will have to prioritise paying suppliers. Banks also consider retailers insurability as one of the key criteria when deciding to lend.