Euler to cut SCC credit in line with trade levels


Euler to cut SCC credit in line with trade levels

Microscope contributor

Euler Hermes is planning to cut the level of credit insurance provided to SCC's suppliers by 30% as it continues to downgrade exposure to the IT sector.

The largest underwriter in the UK channel, which has made sweeping reductions in credit insurance across the reseller and distribution market since the recession took hold last year, notified suppliers of its intentions yesterday.

"We are writing to advise that [SCC's] line will be cut by 30% on 8 July," Euler stated in a standard letter to distributors and vendors.

In reality, the move is unlikely to hinder SCC's supply chain, suppliers have told MicroScope as Euler has hacked off the excess capacity.

A spokeswoman at SCC said the decision would not impact its business, "Euler is bringing the credit insurance more in line with actual levels of trade".

Parent company SCH Group's filed results for the year to 31 March 2008 showed that revenues remained flat year-on-year but profits fell 95% to £455k, while operating profits dropped 37% to £14.1m.

It blamed the difficult trading conditions, falling margins and pressure from vendors taking business direct

More recently though in preliminary figures for fiscal 2009, SCH said that revenues have grown 17%, which the company described as "robust" despite the economy.

The topic of credit provision and the wholesale reductions that have occurred across the entire UK channel has been close to the heart of SCH chairman Sir Peter Rigby.

As revealed earlier this year, he met with PM Gordon Brown to discuss "the critical issue of decreasing trade credit insurance" and the "importance of access to capital; specifically to fund future planned investment".

The Government uptake of credit insurance top-up scheme has been low since its launch in April and is one more area that needs to be seriously addressed before the channel embraces it.

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