Nimbla CEO, Flemming Bengtsen commented: “The much needed injection of cash into UK businesses via CBILS and BBILS has succeeded in staving off insolvency for many SMEs. However it has also created a wave of “zombie” companies that have little realistic chance of survival. Arcadia’s collapse highlights the danger of a domino effect as defaults on trade credit trigger others to fail. We estimate as much as £250m of unsecured debts will be left behind to Arcadia’s suppliers.”

“SMEs are in a precarious position; heavily leveraged and unable to withstand further stress to their business. They require their suppliers to offer credit terms as they cannot borrow more and in equal measure, they cannot afford for their debts to go unpaid. The average amount of bad debt SMEs said would tip them into insolvency was £30k before COVID19. That number is undoubtedly much lower now. Arcadia sadly is just the tip of the iceberg as many more defaults can be expected in 2021. The scheme is set to end 31st Dec 2020.”

In protecting businesses around the UK, Nimbla is calling for the Government to extend the Trade Credit Insurance Reinsurance Scheme until such time as the effects of the crisis and the stimulus have worked their way through the system.

Flemming Bengtsen added: We want to see these companies genuinely recover, if they can. What we must prevent is them dragging others down with them.”

Here are Nimbla’s guidelines for SMEs trading on credit;

— Forget what you think you know about your trading partners, they may have been strong historically but can you really be sure they are now? Engage with them and don’t be afraid to ask difficult questions.

— Check your customers’ credit rating frequently, conditions are changing rapidly. Nimbla offers their real-time ratings and insurance quotes for free. Login to find out more

— Stay on top of overdue debts. Every insured invoice with Nimbla includes a debt collection service.

— If you do have overdue invoices. Encourage your buyers to start a repayment plan as soon as possible. We can help. Contact us and we can help you set it up.

— Even the safest seeming and best-rated companies are prone to failure. It is always best to insure. Consider what value invoice you can afford to lose and above what value you cannot. Sign up today – see how much it would cost to insure with no obligation to buy.

Nimbla is a digital insurance platform backed by expert risk analysts. It allows businesses to check a buyer’s ability to pay, and insure individual invoices against non-payment in a fast and affordable way. This helps business owners to safeguard against insolvent customers, expand into new and existing markets and secure better borrowing terms. The platform can be accessed directly and through our partnerships with Barclays Bank and insurance brokers.

‍