Electronics retailers are at risk of going bust if they have vital trade credit insurance withdrawn.

It has been estimated that a third of independent electrical shops in Sussex could be vulnerable to insurers pulling the cover, which would leave them either without goods to sell or having to pay for goods before they have sold them.

Credit insurance gives manufacturers insurance for the period between supplying goods to retailers and being paid for those items, which usually takes 30 days or more.

The issue is a problem for shops across Britain but electrical retailers are particularly vulnerable because their invoices tend to be high-value.

Peter Mann is the managing director of Radbold, which runs four Sony Centres in Sussex, and was president of the Radio, Electrical and Television Retailers Association (Retra) until last year.

He said: “It would be a big issue for me if we were to lose our credit insurance. Several businesses in the past few months have gone under already.

“The smaller, independent retailers that don’t have huge resources will suffer. It could affect about 33% of retailers in the industry.”

Mr Mann criticised insurers for not doing enough to help hard-pressed retailers survive the recession.

He said: “What’s annoying is that the insurance companies enjoy high premiums in the good years but now, when the going gets tough, they pull the cover.

“It is the big chain that helps the industry survive. If a retailer can’t get insurance and its bank won’t give it a loan then it can’t buy goods from a manufacturer and so it goes on.”

Retra has 1,400 members throughout Britain, including 42 in Sussex, trading from 2,500 sites, with an estimated annual turnover of £1.5 billion.

Current president Bryan Lovewell called on the Government to step in to help if trade credit insurance is withdrawn.

He said: “We are asking the Government to step in as a third party to ensure it guarantees the debt if an insurance company pulls out.

“Manufacturers do not want to see retailers go to the wall because it reduces the supply chain.

“Consumers will be hit too because we might only be left with the big chains, like Comet and Currys.”

The perils of not having credit trade insurance were outlined by Mark Taylor, owner of Chichesterbased Aspire Electronics, which distributes electronic components.

He was forced to remortgage his house last year when one his biggest customers went bust, owing him £80,000.

Mr Taylor said: “It almost sent me under. We have a good business turning over about £500,000 a year. I was determined not to let one guy put me out of business.”

Mr Taylor is meeting with his bank to discuss obtaining credit insurance but is worried about the cost.

He added: “We cannot cope with the additional cost but if we put our prices up then it could affect sales.”