THE £10 billion UK Government scheme designed to protect Covid-hit businesses could offer Northern Ireland firms a competitive advantage, it has been claimed.
The temporary measure will see London act as the reinsurer to guarantee business-to-business transactions currently supported by trade credit insurance.
Trade credit expert Nigel Birney said presents a potential competitve advantage for Northern Ireland businesses.
He said if Dublin does not implement a similar scheme for its own credit insurance market, businesses in the north may be able to offer extended credit terms to firms over the border who can’t secure credit from local suppliers owing to insurers cancelling cover.
He said without a state aid scheme, they could be forced to settle invoices on a pro-forma basis, putting an enormous strain on cashflow.
Mr Birney, who is head of trade credit at Willis Towers Watson in Belfast said that without trade credit insurance in place, companies expose themselves to the potentially catastrophic credit risk of their customers defaulting in paying invoices.
He predicted payment default and insolvencies will increase very significantly during the current economic crisis.
“The UK Government’s sensible decision to temporarily act as the reinsurer to guarantee business to business transactions usually supported by trade credit insurance has provided confidence and relief to many Northern Ireland firms who were very concerned that the coronavirus crisis could cripple their efforts to trade on credit terms with suppliers and customers both at home and abroad,” said Mr Birney.
“Despite extensive lobbying and advocacy from colleagues in the Republic of Ireland, the government there has yet to implement a similar scheme to those now operational in most European countries.”
He said now that the UK scheme had secured EU approval, and with a similar move in the Republic looking unlikely, northern firms should act swiftly by searching for business and export opportunities across the border as soon as possible.
“The UK Government’s scheme will provide NI companies with an added layer of security and confidence to trade domestically and abroad.
With the Covid-19 crisis seriously impacting how firms do businesses, they should be searching for any and all advantages to help them to succeed and operate as normally as possible.
The crisis has significantly impacted the local economy and businesses of all sizes, but the UK government’s scheme presents local firms with some competitive advantage and incentive to seek out and explore opportunities to increase their sales into the Republic of Ireland and beyond.”
