The Irish Exporters Association (IEA) warned that many exporters have now reached a critical point in their cash flow management, as credit insurance underwriters have cancelled or substantially reduced the credit cover extended to them in Ireland.
There is little alternative for many exporters in managing the cash flow requirements for their export orders, as the banks have tightened the conditions to providing credit, or guarantees to their clients, and securitization of exporters receivables is critical to survival in the current economic environment, said John Whelan, CEO of the IEA.
This puts the 9 billion ($11.5 billion) of exports covered by credit insurance on a rolling six-month basis. It also places an additional 10 billion of home-based trading that is covered by credit insurance, which affects the supply of locally produced goods and services to exporting companies.
We are looking at market failure on a massive scale, which has already lead to widespread creditor liquidations, totalling 753 closures in 2008, Whelan said. Export industry expects 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.
