Boohoo’s credit insurer Allianz Trade has slashed cover for its suppliers, which threatens to enhance financial pressures on the fashion retailer, according to reports.
Allianz Trade has reduced its cover, which protects suppliers against the risk of their client going bust before payment is received, by an average of 50%, according to The Sunday Times.
It was also reported that for some suppliers coverage levels are anticipated to be cut to zero from September.
This could “exacerbate” Boohoo’s cash flow as when cover is unavailable to suppliers they are more likely to request upfront payment from the retailer.
A Boohoo spokesperson told the newspaper: “With the credit insurance capacity less than 50% utilised, we wouldn’t expect any real impact from the reduction.”
Allianz Trade did not provide a comment.
This comes after Boohoo posted a drop in revenue and profits in its latest year-end results as the retailer continued its bid to return to growth.
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