Sales fall as retailers struggle with cash flow – expert insolvency comment and data
Following the news that retail sales fell by almost 7% in January, Owen Bassett, expert retail underwriter at Atradius, said: “There are bumpy times ahead for British retailers and hospitality businesses alike. And news of falling retail sales are a concerning indication that we are likely to see lots of retailers fall victim to the recession over the next few months.
“The first quarter of the year is usually one to watch for retail and hospitality insolvencies during the post-Christmas quiet period. in fact, our data on late and failed payments shows claims were up by over 160% in the sector in 2022 compared to 2021, after a period of subdued activity. To avoid getting swept up in what could be an influx of insolvencies in early 2023, businesses will need to make sure they’re effectively managing their supply chains and doing what they can to avoid holding onto excess stock. We – at Atradius – continue to underwrite retail firms on a case-by-case basis, but it’s crucial that firms have robust and updated financial insight and forecasts. To guard against the domino effect that crumbling supply chains can have on firms, a trade credit insurance policy can play a very important role in maintaining a company’s confidence in its trade debtor book. In a time of high volatility this could be a determining factor as to whether a company flourishes or fails.”