Retail therapy could be in short supply in the spring because suppliers have told a number of Irish fashion retailers that they now have to pay cash on delivery or within seven days instead of the usual 30-60 days as fears grow about the future of many retailers.

That could lead to empty clothes rails in the spring, they said. Suppliers have told long standing customers that they aren't worth taking a risk on, according to senior retail sources, who said that the retailers did not have the cash to pay within the new timeframes set out by suppliers.

Retailers typically took out credit insurance to protect themselves against bad debts but providers are hiking up premium payments to reflect the increased risk. Trade Credit Brokers, the IFG subsidiary, which is Ireland's largest independent credit insurance specialist broker, says that retail along with transport and construction are areas of concern.

"Trade Credit Brokers are working closely with the credit insurers on behalf of their policy-holders in an effort to provide up to date financial information to overcome this difficulty. However we're experiencing in­creases in premiums by approx 30% across these areas of concern and indeed providers are not offering renewal terms in some cases," said its commercial director Celine Caulfield, who said there had been a huge number of claims recently involving JJB Sports which "has had a huge impact".

The difficulties surrounding Icelandic retailer Baugur is already having knock on effects. Baugur owns or has stakes in a huge number of high street retailers including House of Fraser, Hamleys and Oasis.

It has now run into debt problems and Philip Green of TopShop has expressed an interest in the company. A senior retail source said his interest is mainly in taking control of House of Fraser, Hamleys, Oasis and Karen Millen.

"Trade credit insurance companies are restricting and withdrawing cover of the downturn in the sector," said Caulfield. "The state of the Icelandic economy has lead to dramatic action by the credit insurers in withdrawing and reducing credit limits... insurers are concerned that this factor, combined with the falling turnover will have a negative impact on the survival of these companies. There is a lack of capacity in the credit insurance market in the same way as there is a lack of bank funding."