The Irish Exporters Association warns that many exporters have now reached crisis points in their cash flow management. The association says that credit insurance underwriters have either substantially reduced or cancelled the credit cover to Irish companies.
Export credit insurance insures companies against buyers defaulting. For day to day running expenses, it enables an exporter to turn the sale into cash immediately.
The IEA's chief executive John Whelan cautioned that the country is looking at market failure at a massive scale. He said that the current economic situation has already lead to widespread creditor liquidations, totalling 753 closures last year.
'Export industry expect this company closure trend to accelerate as we proceed through 2009, with 74 insolvencies in January already and an estimated 900 for the full year, unless corrective action is taken quickly,' he added.
He said that credit insurers are responding to the higher international risk climate by reducing their exposure. In doing this they have reduced the insurance cover and cash flowing of overdue debtor payments. 'This in turn reduces the credit worthiness of the exporter in the eyes of his suppliers and bankers,' Mr Whelan added.
