2009-11-19

By Editor, CIR

Businesses could face new challenges in securing energy supplies as a result of the economic climate. This warning comes amid concern that many UK companies have a lack of understanding on credit insurance and the impact that it will have on their business. In the case of supplier npower, more than £100m worth of insurance was withdrawn for customers in 2009.

"As a result of the economic downturn many businesses have experienced changes to their financial performance, which in turn has affected their credit ratings and how suppliers insure against them. This could then have a knock-on effect to their access to essential supplies, like energy," said Wayne Mitchell, head of consultant sales at npower.

The solution, says Mitchell, is more open dialogue so that accurate decisions on insurance and energy supply can be made without exposing businesses and their suppliers to risk.

"Our own research with companies has revealed that many are struggling to understand the current credit insurance crisis so we're working with them to explain what it is, their exposure to it and what actions they can take to mitigate credit risks," Mitchell adds.

npower is working with the Major Energy Users Council (MEUC) to reach businesses and bring to their attention the importance of carefully managing credit insurance.

Andrew Bainbridge, director-general of the MEUC said: "Without a full appreciation of credit insurance and how this could affect their operations, businesses could face potential challenges in their energy contracts. We believe credit management will continue to be a big issue, which is why we've been bringing it to the attention of businesses and underlining how important it is for them to actively engage with their energy suppliers. Working closely together to find the best solution will benefit all parties."

npower has created a jargon-free credit guide for UK businesses to help them understand how suppliers calculate and measure credit. Download at www.npower.com/riskmanagement

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