A textile company is trading strongly, over nine months after it could have hit the rocks.

Softex International Limited, in Leicester, imports yarns for knitting with the final products ending up in the stores of Burberry, M&S, John Lewis, Laura Ashley and Debenhams. In November last year, the firm was threatened with financial turmoil after one of its customers, a fashion manufacturer, went into administration.

However, they received a pay out from trade credit insurer Atradius for over £55,000 which kept the business afloat. Today, Softex is continuing to trade successfully.

Kiran Yarashi, managing director of Softex, said:

“In an already extremely tough textile environment, had we not been able to recover this defaulted payment from Atradius, we would have been facing a very difficult financial situation ourselves.

“The administration was unexpected. It was a long-standing customer with a reported turnover of £15m and there were no signs that it was about to go under. The loss would have left a big hole in our finances and we couldn’t have continued operating without the claims payout from Atradius.”

Softex’s experience demonstrates that you can never assume that you’re safe from the risks of insolvency. High profile insolvencies already this year include BHS and Austin Reed. However, as Softex has experienced it is not only the failure of high-profile customers that can cause a financial headache.

Tanya Giles, Regional Manager at Atradius, said: “Insolvencies are brutal and leave a trail of destruction along the supply chain. Small businesses are particularly at risk as they may not be able to sustain the financial impact of unpaid invoices, nor indeed the loss of a customer from their book.

“The biggest single thing a business can do to mitigate the risks of non-payment is to protect themselves. Trade credit insurance provides simple, cost effective protection to businesses against the risk of not getting paid. If you can’t get paid, for instance if your customer becomes insolvent, defaults on the payment or is affected by political risk, you can make a claim to Atradius, reducing the need for bad debt provision and releasing money back into the business.”

Mr Yarashi, of Softex which has been an Atradius customer for a decade, added:

“Atradius is always opening up limits for new customers for us. For instance, when I had the opportunity to supply a multimillion pound turnover company, I wanted to ensure I could supply them with whatever they needed – with the right protection. Atradius gave me a large credit limit and we could start doing business immediately. That year, we turned over £1m of business with that company; Atradius played a major role in our business’ success. I would always take the opinion of Atradius whether to supply a customer as they can advise if I’m likely to get paid or not – and I don’t want to take a hit. They help me decide where to do business and where not to do business.”

For more information on Atradius or to download Atradius’ insolvency warning checklist, visit www.atradius.co.uk You can also follow @AtradiusUK on Twitter.