Credit Risk & Insurance

One of the most common reasons suppliers are not able to offer customers a contract is due to credit concerns. Suppliers face two forms of credit exposure to consumers of energy; Settlement Risk (SE) refers to the value of goods delivered but not yet paid (debt) for whilst Mark-to-Market (MtM) is the potential loss in the wholesale market by selling back your forward commodity position at a loss.

Having spent 10 years heading up the B2B credit department at npower Business Solutions, our Managing Director is ideally placed to support you if you find yourself facing credit demands from your supplier. Maybe this is due to a deterioration in your financial health, the market sector you operate within, or trade credit insurance having been revoked. Whatever your situation, we will have experience of dealing with it and can find a suitable resolution for you.

From a generator’s perspective, the credit exposure you face is against the offtaker. Like in the above scenario, you will be exposed to Settlement Risk and Mark-to-Market. Whilst suppliers are concerned about a rising wholesale market, you will be concerned about a falling market i.e. the risk the offtaker defaults and you have to re-contract your output at a lower price. We can support you in understanding the risks you face, the size of that credit exposure and whether it may be possible to mitigate that exposure. As well as typical forms of direct credit support, it may also be possible to arrange trade credit insurance (we are experts in this field).