The Government is belatedly cutting the cost of its trade credit insurance top up scheme months before it is due to end, in the hope of improving the poor uptake.
The Department for Business Innovation and Skills (BIS) has halved the price of top up cover from 2% to 1%, removed the £20,000 minimum limit and doubled the upper level from £1m to £2m - not the first time it has overhauled the initiative.
According to official figures, only 52 companies have used the top up scheme, amounting to just £7m worth of credit insurance.
In a statement, BIS said businesses were adapting to cuts in credit insurance and had reduced their dependence on underwriters.
"However, businesses that have not been eligible for this scheme also need the opportunity to adjust to reductions in their trade credit insurance cover. [The] changes will allow more businesses to benefit from this extra breathing space so that they can adapt to their new circumstances in the longer term," BIS added.
The initiative - which concludes in December - was unveiled in the April budget but take up has been limited because many in the channel feel the cost of top up cover is far too expensive, estimated to be four times the cost in the private sector.
Another criticism is that the scheme was only available from April when many credit insurers had made swingeing cuts to lines in Q4 last year. Earlier this summer, the Government backdated the top up cover to October in recognition of this fact.
The first iteration of the scheme was hurried, Eddie Pacey, European director of credit services at Bell Microproducts told MicroScope, and though the second change was sensible, it had come a little late in the day for many in the channel.
"If the scheme in its current guise had been launched in April, take up would have been better, but with the end date looming, I do not suspect adoption will improve dramatically," he added.