Debenhams denies cash crunch woes

Debenhams has said its cash position is “healthy” after reports that some insurers have reduced cover for its suppliers.

Reports said the retailer was facing “a cash crunch” because some credit insurers had tightened their terms for Debenhams suppliers.

The store chain said its relationship with credit insur- ers was “constructive” and all were continuing to provide cover to its suppliers.

Suppliers use credit insurance to cover them from the risk of not being paid. When insurers reduce their cover or withdraw it altogether, it means they are concerned about the ability of their customers to pay their debts.

One major credit insurer, Euler Hermes, is understood to have reduced the amount of credit insurance it will provide to Debenhams’ suppliers for orders for the new season.

Meanwhile, some new suppliers are believed to have found it difficult to get credit insurance for Debenhams’ orders.

Debenhams acknowledged market conditions were “challenging” but said it had “a clear strategy in place” and was taking “decisive actions to strengthen the business”.